The late-model Alfa Romeo in the car park is perhaps the only sign of anything approaching corporate glamour. Next to it is a late-model Holden, which seems more in keeping with Cristal Air International’s (trading as HRV) Westie roots. These meagre clues are the only visible signs that New Zealand’s fastest-growing company may be headquartered in the vicinity.

A new office and factory are under construction just around the corner, but for now, Cristal Air hides its light in a dowdy building in the commercial badlands of New Lynn in west Auckland.

As you walk in through what appears to be the front door, you immediately find yourself in a small room which is home to several telemarketing staff. There is no front desk or receptionist. But a smiling telemarketer asks my business and tells me to follow the yellow arrows around the corner and up the stairs to find owners Marcus Foot and Mike Perrett, managing director and sales director respectively.

This is deliberate, Foot says later. Visitors often think they’ve come through the wrong door, but it’s Cristal Air’s way of demonstrating that telemarketing staff are as important as anyone else in the company.

“We’re very proud of them,” says Foot. “They have an enormous amount of enthusiasm for what they do and everyone who comes through that door comments about our telemarketing.”
“They’re our primary promoters,” adds Perrett.

With revenue growth of 732.3%, Cristal Air is the 2006 Deloitte/Unlimited Fast50 winner, just ahead of Auckland-based Cohesive, which designs and installs computer networks and offers technology consulting, on 729.5%. Trilogy, a Wellington-based natural skincare company with revenue growth over two years of 689.6%, placed third.

Cristal Air makes and installs a heat recovery ventilation system. It started out in a converted villa just over three years ago, and now has 14 franchisees throughout the country, and an office in Melbourne — the next frontier for the company. Revenue totalled $1 million in the first year, $5 million in the second year and $9 million in the third. The company says in the first five months of the current year revenue totalled $20 million.

What underpins that sort of growth? Partly timing; partly good marketing. There’s much more awareness now of the unhealthy aspects of damp homes, highlighted in a recent report from the Building Research Association of New Zealand, which found dampness to be a major problem in Kiwi homes, especially modern ones. And HRV believes in saturation marketing. Educate to motivate, says Perrett, who is fond of marketing phrases.

“We’re doing 5,000 in-home presentations a month and we’ve got a couple of primetime TVCs a day and then substantial radio. We’ve manufactured the market and created demand.”

Foot calls the ventilation system a common-sense solution to a common problem.

“We used to live in bungalows and villas that naturally breathed and people used to leave doors and windows open. Now our buildings are hermetically sealed, they don’t breathe at all and people don’t leave doors and windows open. Your typical family wake up in the morning, they breathe and cook, they shower, they lock the home up like Fort Knox, they come back, they eat, they breathe, they shower, they do all the things that create moisture in the home, they sleep the night, that’s generally the cycle. The moisture content in homes is getting worse and worse and people wonder why they suffer from all these respiratory issues and it’s simply the environment we live in.”

A few simple philosophies drive the company, says Foot, like ‘underpromise and overdeliver’, and ‘always do what we say we will do’. Foot and Perrett are big on keeping customers happy, and creating a happy company culture. It seems self-evident that a successful business would try to ensure those things but Cristal Air has obviously honed them to the nth degree.

The company also likes to keep control from start to finish. It controls marketing through media company Brand Group, which it owns with Dave Mason. Foot and Perrett insist he is the brains behind their marketing.

They set up another company, NRG Electrical, to take care of installation because they didn’t want to rely on outsiders. “We didn’t want contracted electricians to influence the service to our customers,” says Perrett.

They still retain partnerships in several of the franchises around the country, and they’ve begun a property company — HRV Properties — to look after a few property investments.

Another company to seize the moment (in this case environmental concerns over coal fires) is Escea, number six on the Fast50 with two-year revenue growth of 519.9%. It’s one of two Dunedin companies in this year’s Fast50. The other is Southern Hospitality, at 36 with 190.0% revenue growth over two years.

Escea’s goal is to make the world’s best gas fires, and it always thinks about the best way of doing things rather than worrying about what established players may do. It decided from the start that a key to success lay in understanding what customers wanted. Managing director Nigel Bamford, one of Escea’s three owners, spent four years managing a gas appliance retail and installation business in Nelson and continually picked his customers’ brains to build a picture of the strengths and weaknesses of gas fires on the market. Innovations include the ability to turn on an Escea gas fire via cellphone or online.

Bamford says the company wants to export to one new country a year while retaining Dunedin as its base. That way it gets good rent and a stable labour force. It has good relationships with Otago Polytechnic and takes on design students for work experience while having access to a pool of graduates looking for work. And it has used the local university’s marketing department for marketing research. It contracts out the manufacture of the fires to local engineering companies while putting its efforts into design and sales, and, as Bamford points out, what better place than the deep South to design and build efficient gas fires?

Up to a third of this year’s Fast50 is made up of tech companies. As Brett Chambers — the Deloitte partner driving the Fast50 — notes, they tend to have a business model which can easily be replicated.

“It’s not as easy as burning another CD but you’ve got a value formula which can be rolled out somewhere else.”

That brings other challenges, like finding the right people to sell the product, says Cohesive managing director Dale Daniels. Cohesive, number two on the Fast50, is a technology service company, selling network design and infrastructure expertise. It has its internal organisation sorted, says Daniels, but finding the right technical staff who can also act as de facto sales people is a real challenge.

Other types of businesses among the top ten include skincare company Wellington-based Trilogy, which exports to seven countries, and Hamilton-based Torpedo7, a retailer of cycling products, which ranks number seven with two-year revenue growth of 477.6%.

The larger your company gets the harder it is to maintain these high growth levels.

Last year’s winner, 42 Below, has dropped back to number 22 with two-year growth of 257.7%, well below the company’s whopping 2,116% growth over the previous two years. It was still good enough to have seen the company recently sold to Bacardi for $138 million. The ranking 42 Below achieved is a reflection on this year’s results, which are gathered in a tighter band despite an increased threshold for the first year’s revenue, up from $150,000 to $250,000.

In the past, Fast50 companies have commonly said their future strategy is to convert growth into profit. This year companies are concentrating more on adding new customers and getting more revenue out of their existing ones, says Chambers.

“The emphasis is on customer service and controlling the rate of growth. A lot of growth can be reactive but these companies want to be in control of their destinies.”

And they’re maturing. While the burning question last year for companies thinking about strategic growth focused on internal challenges, companies this year are looking to external factors, says Chambers, who uses a marketing analogy to illustrate the point. If last year’s Fast50 was full of startups or brash young teenage companies, which were growing really quickly, eating up capital like a growing teenager devours the contents of the fridge, this year there are more Gen Y companies wanting to move forward quickly and focused on ways to win new customers.

“They’re far more outwardly focused and looking at alliances and how they might leverage other business to grow.”

And while last year the overriding impression was that we were learning to love our tall poppies and they, in turn, were learning to love themselves, this year Chambers came across a surprising number of companies with growth rates sufficient to make the Fast50, which declined to enter. There was an attitude out there of ‘let’s keep our heads under the radar’, probably due to timing more than anything, says Chambers.

“It was about the time of the Provincial Finance thing so there were a few companies thinking, ‘do we set ourselves up to suffer from the great Kiwi bashing machine?’”

Without exception, Fast50 companies are unflinching optimists, bullish about their futures and expecting to expand over the next 12 months, often by as much as 50%, which suggests that they’re not representative of the companies which feature in a succession of polls forecasting doom and gloom on the business front.

Are they representative of Kiwi business? Chambers thinks so. “There’s a good cross section there with a real Kiwi attitude. You see from the size of the businesses that they’re really in the New Zealand mid-market sweet spot — that ten to 50 employee business doing $5 million to $10 million. That’s real Kiwi business. A lot of them are companies that have been developed on the strength and passion of a founder totally committed to what he or she is doing and I think that’s the New Zealand way.”


Kiwi born and bred
Managing growth when you’ve got 600-plus employees takes on a whole new dimension. Just ask Kiwibank chief executive Sam Knowles. Five years ago, his bank was a baby, a startup spread over just one floor. Now its headquarters sprawl over six floors, it has more than 600 staff, profit doubled in the past year to $15.8 million, and the bank is adding customers at the rate of 2,000 a week. That kind of growth put Kiwibank at number 39 on the Fast50 with revenue growth over two years of 185.4%. (It ranked 18th in 2005 with growth of 363.4%.)

But the challenges lie not just in the physical manifestation of growth. Knowles has to grapple with the classic symptoms of an organisation in transition from brash startup to process-driven maturity. And the bank’s cultural growth must match the physical growth. It’s not just about continually launching new products to broaden the bank’s offering to customers, although Kiwibank is now into business banking, and the mortgage market through its 51% holding in New Zealand Home Loans.

“Banking is changing quickly,” says Knowles, “and we have to flesh out the full offer.”

It’s about growing leaders to match the pace of change and ensuring employees are along for the ride. Invariably, some don’t grow with the organisation.

Knowles attributes the bank’s success to its distribution network through Post Shops as a subsidiary of New Zealand Post, its efficiency, its products and market position, and its staff, many of them attracted from other Australian-owned banks because they prefer working for a high-profile Kiwi company.