Pivot Points: 12 Local Companies At Key Junctures
Building a business is challenging, no matter what’s happening in the broader economy. It’s even trickier to build a growing business in today’s economy. How can you construct a sustainable business? Study businesses that have found a formula for remaining nimble in the short term while still focusing on the long-range big picture.
Minnesota has a reputation for supporting a diverse business economy. For this overview, Twin Cities Business examined growth strategies of 12 local companies, including small, mid-size and large businesses. They are continuing to post strong revenue increases and some have reached key junctures in their business lives. Many of the company leaders are facing pivot points as they assess the steps needed to take their businesses to the next level.
We selected companies from diverse industries—software, medical devices, manufacturing, retail, personal aircraft and more—and we chose a mix of private and public companies.
The recession has been over for years, but global economic uncertainty seems to be “the new normal” for many business leaders. Amid those challenges, the 12 companies here have all found pockets of growth in their respective industries.
Cirrus Design Corp.
Duluth-based Cirrus is hardly a startup company: It traces its roots back more than three decades. But the aircraft manufacturer is seeing strong growth driven by increased demand for its planes. The company is planning to add 150 new jobs in Duluth, which will boost the company’s workforce to about 825 employees.
The company is constructing a new $16 million painting and finishing facility and that cost covers the building, infrastructure and equipment. The state of Minnesota is lending its support with a $4 million loan from the Minnesota Investment Fund.
This year Cirrus is rolling out the new Vision SF50 personal jet, a $2 million airplane. In early March the company already had orders for more than 550 of the new planes, opening a new chapter for the high-flying Cirrus. The company expects to start delivering the new jets in the second half of 2016.
Proto Labs Inc.
The town of Maple Plain is a long way from Wall Street. But it’s home to Proto Labs Inc., which has been a steady success story among Minnesota manufacturers since it was founded in 1999. The company has continued strong growth under Vicki Holt, who was tapped as CEO and president in February 2014. The company quickly cranks out custom parts and prototypes for product developers and engineers through injection molding, 3D printing and automated machining.
For 2015, Proto Labs saw net income of $46.5 million on sales of $264.1 million. The company’s top line has climbed 167 percent in four years, from $98.9 million in 2011. When it reported results in February, the company saw its fourth-quarter revenue up 32 percent, and its full year revenue was up 26 percent.
In September 2015, Proto Labs was the only Minnesota company to land on Fortune magazine’s 100 Fastest-Growing Companies list. The annual tally ranks public companies which show the best three-year revenue, profit and stock growth. Proto Labs is now expanding its global reach. In October, Proto Labs closed on its acquisition of select assets of Germany-based Alphaform AG, a move to expand its 3D printing capabilities across Europe.
Founded in 1999, Sign-Zone Inc. now has more than 350 employees. The company produces signs and other visual displays for the trade show industry.
The company has been a regular on the Inc. 5000 list of fast-growing companies, appearing on the list consistently from 2007 through 2015. Sign-Zone’s latest Inc. ranking noted a three-year growth rate of 63 percent, with revenue of $58.5 million for 2014. The Golden Valley-based Manufacturers’ Alliance association recently named Sign-Zone its Manufacturer of the Year in 2016 for mid-size companies.
In 2014 Sign-Zone announced plans to relocate its headquarters to Brooklyn Center because the company needed more space to accommodate its continued expansion. The company bought and rehabbed Palmer Lake Plaza in Brooklyn Center for its new base of operations.
The state helped support the move with a forgivable loan of $125,000 from the Minnesota Investment Fund, tied to the creation of new jobs. When the state announced the deal in June 2014, Gov. Mark Dayton noted that the company was growing at a steady clip, adding 100 jobs in the previous five years.
Minnesota long has had a strong medical device industry, a category where it is among the nation’s leaders. Even as interest in digital health and health IT startups is picking up, the state remains fertile ground for medical device startups.
If investor interest is any gauge, New Brighton-based Cardionomic Inc., which is developing a therapy to treat acute decompensated heart failure, will be a company to watch closely. In October the company secured $21.8 million in Series A financing, which ranked as one of the larger local deals of 2015. Cardionomic investors include the Cleveland Clinic, one of the top medical centers in the U.S., where the technology was originally developed.
President and CEO Steve Goedeke’s resume includes a 17-year stint at Medtronic, where he served as a senior director in the Cardiac Rhythm Disease Management division. Cardionomic’s technology electrically stimulates cardiac nerves and is considered neuromodulation, which has been touted as one of the fastest-growing segments in the medical device industry.
St. Paul-based Minnetronix Inc. doesn’t have the scale of Medtronic, but the company is still making waves in the medical device sector. The company was founded in 1996 by three former 3M engineers; over the past two decades Minnetronix has grown from three to 220 employees. For 2015, the company posted more than $60 million in revenue.
Minnetronix got its start working with other companies to help them design, engineer and manufacture both electronic and electromechanical medical devices. More recently, it has expanded its business, developing proprietary medical technologies and therapies, which will be a new growth engine for the company.
After 20 years in business, the company announced in January that it had raised its first-ever investment of outside capital. New York-based Altaris Capital Partners invested $20 million in equity capital for a minority stake in the company; the investment will drive future growth for Minnetronix. Altaris invests exclusively in the health care industry. As Altaris sees it, Minnetronix is “leveraging its engineering expertise to develop a platform of proprietary technologies that possess clinical breakthrough potential.”
Retailing & Restaurants
Buffalo Wild Wings Inc.
Is the Middle East ready for Buffalo Wild Wings? In September the Golden Valley-based chicken wing purveyor opened its first location in Dubai.
Today Buffalo Wild Wings is within reach of becoming a $2 billion company. For 2015, the company reported revenue of $1.81 billion, up 19.6 percent from 2014 and up 131 percent compared to 2011. While many retailers and restaurants continue to see challenges, Buffalo Wild Wings saw same-store sales at corporate locations up 4.2 percent in 2015. (Franchised locations were up 2.5 percent.)
Is there still room for Buffalo Wild Wings to grow? The company, which had 1,163 corporate and franchised “B-Dubs” locations at the end of 2015, has as many as another 100 locations in its development pipeline for 2016, including corporate and franchised locations. That includes another 12 to 15 international locations.
At the end of the day, it’s tough to bet against Sally Smith, who has led the company as CEO and president since 1996.
There’s no question that Minneapolis-based Target has been through some challenging times. The data breach. The failed expansion into Canada. Waves of corporate layoffs. Selling off its pharmacy business to CVS.
It can be daunting for large, mature companies like Target to find new ways to grow, but CEO Brian Cornell has done so. When Target released its year-end results for 2015, the company reported that its comp-store sales were up 2.1 percent for the year and its overall revenue was up 1.6 percent. While those numbers might sound small, today’s intensely competitive retail landscape has become a game of inches. In the key holiday shopping quarter, Target’s comp sales were up 1.9 percent while Walmart’s domestic stores were only up 0.6 percent.
It’s a crucial time for Target as Cornell works to reset the business. Cornell has been working to refocus the retailer on select “signature” product categories, build up its online sales and overhaul Target’s approach to selling groceries. Along the way he has brought in numerous new executives to bring a fresh perspective to the business.
Another notable detail: Target is more profitable than e-commerce giant Amazon.com, a competitor for everyone in the retail business. Last year, Amazon posted a profit of $596 million on more than $107 billion in revenue. Target’s bottom line? Profits of $3.4 billion on revenue of $73.8 billion.
Software & Information Technology
Apex Revenue Technologies
Within the health care industry, the term “revenue cycle” refers to the full process, from when a patient receives care to the point at which the account is paid in full. But the process has typically been protracted, complex and unpredictable for health care providers that are dealing with insurance companies in a fast-changing industry.
Little Canada-based Apex Revenue Technologies’ technology and cloud-based software is designed to streamline the process for the providers. The business model is paying off: The company landed on the Inc. 5000 list in 2015 with a three-year growth rate of 57 percent, based on 2014 revenue of $55.5 million. The company previously made the list in multiple years.
Although Apex has been around since 1995, the company continues to innovate. In November the company received a Tekne Award from the Minnesota High Tech Association in the Software–Small and Growing Companies category. The award honored Apex Connect, a software platform the company launched in 2014 that allows health care providers to communicate more effectively with patients about financial issues. Apex won an earlier Tekne Award in 2011.
Atomic Data LLC
Minneapolis has a diverse business economy, but it has not historically been known as a tech center. Yet locally grown companies like Atomic Data, which offers a broad range of IT services, are changing that. Atomic Data is based in the North Loop area of downtown Minneapolis, a trendy neighborhood that is increasingly attracting tech startups.
The company is serious about IT security. Its largest data center is located in what was once vault space at the former Minneapolis Federal Reserve building (now Marquette Plaza) in downtown Minneapolis. In January, the company opened a data center in Dallas—the ninth for the company—which is also in a former Federal Reserve building. Although Atomic Data is locally based, the firm has global reach, with data centers in London, Toronto, Madrid and Hong Kong.
The company landed on the latest Inc. 5000 list after posting three-year revenue growth through 2014 of 116 percent. Atomic Data now has 115 employees and posted revenue of $20.2 million for 2015, up 21 percent from the year before.
Code42 Software Inc.
It wasn’t too long ago that fast-growing Code42 Software seemed to be hitting a few bumps in the road. The company scrapped a planned move to the Uptown area of south Minneapolis in late 2014. Then last year, co-founder and CEO Matthew Dornquast stepped down from the top job of the data security and protection company.
But today the company is showing no signs of slowing down. In July 2015 the company tapped Joe Payne as its new CEO and president. Payne previously led marketing software company Eloqua, which he guided through its 2012 IPO and its sale to Oracle for $935 million in 2013. Last October, Code42 landed $85.6 million in venture capital financing—the largest Minnesota VC deal in years—to fuel future growth.
As the company gears up for its next phase, it has added several tech industry veterans to its executive team, including Rick Orloff. The former chief information security officer for eBay is now Code42’s chief security officer. Founded in 2001, the company now has more than 400 employees and 37,000 clients. To accommodate its growth, Code42 decided to move its headquarters from Riverplace on Main Street in Minneapolis to Washington Square downtown.
The basics of buying a car haven’t changed much over the years. You find a car dealership, you walk on the lot, you kick a few tires, you talk to the salesperson and maybe you take a test drive or two. Maybe you buy a car and maybe you don’t.
But Minneapolis-based Outsell arms auto dealers with digital software tools to track the customers who are more likely to buy a car. The company’s BuyerScout tool uses predictive analytics to help dealers pinpoint consumers who are more likely to make a purchase, thereby boosting sales. The company’s partnership with global advertising agency Saatchi & Saatchi on the launch campaign for the 2015 Toyota Camry has won numerous industry awards.
Last year Outsell earned Honor Roll status after landing on the Inc. 5000 list for the fifth year in a row. The magazine’s 2015 list tallied a three-year growth rate for the company of 54 percent and noted revenue of $17.3 million for 2014. The company has its foot on the accelerator: Outsell is expecting to top $20 million in sales this year.
The growth of the temporary staffing industry has been good news for Eagan-based TempWorks Software. The company provides staffing and recruitment software for temporary staffing companies, and it also offers payroll funding services.
The company, founded in 1997, is seeing strong growth as it expands its territory and adds new programs. The company changed hands in late 2014 with a management buyout led by CEO David Dourgarian. Last year was pivotal for TempWorks as the company began to expand internationally, opening an office in the United Kingdom.
Revenue for TempWorks hit $18.6 million in 2015, up 12 percent from 2014. At the end of 2015, the company had 135 employees. The company’s new Funding It Forward program, which provides payroll financing and mentoring, helped launch more than 30 staffing startups across the U.S. last year. tcbmag
Burl Gilyard is TCB’s senior writer.