MountainWest Capital Network Utah 100

15th annual list highlights Utah’s fastest growing companies.

by Steve Gooch and John Blodgett

For 15 years the Utah 100 has been the preeminent authority on the state’s business climate. Every October since 1995, CEOs and business leaders have anticipated finding out if their company grew enough to be a recipient of the annual award. Even in the aftermath of the dot-com crash and the credit crunch, Utah companies posted strong five-year growth rates and the Utah 100 helped show out-of-staters the favorable economic conditions that Utah fosters. More importantly, though, the Utah 100 shines the light on companies that often go unnoticed, companies that post impressive numbers, but that don’t always get the public recognition their efforts deserve.

Growth tracker

John Knab, CEO of Phonex and a longtime board member of MountainWest Capital Network (MWCN, the Utah 100’s parent organization), started the Utah 100 as a way to recognize the state’s top-performing businesses in a more objective manner than was occurring at the time. He says that several organizations, including Ernst & Young and MWCN itself, had awards that recognized entrepreneurial spirit in the state, but they were more subjective and relied less on hard data. Many of these awards were given by panels of judges that would decide who should be honored. Knab’s vision was an objective prize based purely on numbers.

The Utah 100 is awarded solely on the basis of a company’s five-year revenue growth rate; for the 2009 awards, the Utah 100 committee looked at each applicant’s growth between 2004 and 2008. Knab says a five-year period was chosen to remove the possibility of a “flash-in-the-pan” taking top honors. The Utah 100 is meant to be an award for strong, long-term performers. “What’s really impressive, if you look at the math of it, is some of these companies have been Utah 100 winners for four, five, six years,” says Lex Watterson, CEO of MountainWest Capital Network. “When you’ve been in business 10 years and you’re still able to make that growth hurdle, you’re a real company.”

Out from the shadows

But rather than giving more press to the same economic mainstays that gobble up headlines statewide, the way the numbers shake out means that the Utah 100 often honors companies that aren’t household names. That’s exactly what Knab thinks should happen. “What’s important about [the Utah 100] is that it’s a vehicle to recognize the fastest-growing companies across our state, which a lot of the times are the companies below the radar,” he says. “We’re seeing huge growth from companies that didn’t even exist six years ago, and the Utah 100 tends to expose these mega-success stories.”

These smaller companies are often involved in deals that are rarely heard about, whether by design or by lack of perceived newsworthiness. Many times, however, these companies are among the state’s best-performing companies. The list invariably contains names you’re accustomed to seeing in business headlines — companies like Skullcandy (No. 2), Omniture (No. 17) and Myriad Genetics (No. 40) — but here they keep company with lesser-publicized but high-performing companies like Revinetix (No. 6), ATMequipment.com (No. 16) and the Buckner Company (No. 94).

Regardless of the size of the companies involved, the Utah 100 gives a good overall view of Utah’s business climate, which is invaluable to venture capital groups or businesses with a need to fill. “Somebody can look at the Utah 100 list and go away impressed at the kind of businesses that exist in the state of Utah,” says Watterson.

Steven Stauffer, chairman of the Utah 100, agrees. He says the Utah 100 shows other states the strength of Utah’s marketplace and, by extension, furthers MWCN’s goal of promoting business growth and networking. He says the Utah 100 goes hand-in-hand with another MWCN event, the publication of the annual Deal Flow report, which lists the details of every business deal in the state in a given year. “Part of the reason for doing that is to show off all the deals done in the state for the benefit of people in other states. A lot of people outside the state are surprised at how well companies are doing and how the economy is thriving and how many deals are done here.”

Meaningful recognition

But aside from the professional accomplishments that the Utah 100 highlights, there’s an undeniable personal pride inherent in the awards, says Knab. “We’ve seen grown men get teary-eyed because they never dreamed that anybody knew or cared that they were having that type of success.”

Adam Edmunds, CEO of Allegiance, a South Jordan-based company that creates feedback management software, says, “It sends a message to our employees and customers that we’re growing and doing well and that we’re headed in the right direction. It keeps our goals high; it gives us the motivation to keep getting bigger and better every year.” Allegiance was listed among the Utah 100’s Emerging Elite for 2007, 2008 and again made the cut in 2009.

Stauffer says many honorees see the Utah 100 as a badge of honor and often use it to demonstrate ability and high peer regard to visitors. “We do see a lot of the companies that are recognized using the award as a way to add some credibility to the company. So we’ll see the award mentioned on their websites, hanging in their offices as we go in,” he says. Watterson adds, “You hardly ever go into a Utah 100-winning company where you won’t see the plaque. Often there are multiple plaques.”

Edmunds says when he was starting out in business, the Utah 100 was a veritable how-to guide, as well as a yardstick for measuring success. “I made it a priority to go and suck all the knowledge I could out of all the companies who were leading the Utah 100 at the time,” he says. “The Utah 100 helps younger businesses understand what’s possible. It provides a goal for entrepreneurs that are just starting out.”

‘Beacon of inspiration’

During the last 15 years, Utah’s business climate has experienced some pretty intense fluctuations, according to Knab. When the Utah 100 was launched, times were great and venture capital veritably flowed like water from a tap. Then the market burst in the 2000s just like the dot-com implosion that caused it. Things got better for a while, but now we’re back down in the gloom.

“We’re not seeing any public offerings anymore,” says Knab. “We were surprised that things kind of got stale. Now we’re seeing a surge of activity again, but the problem is that a lot of venture capitalists internally are very wounded over what has happened in the last two and a half years.” He says he’s heard rumblings that in the next six to nine months, up to half of all venture capitalists in the U.S. may close their doors. This is because the cash required to raise many portfolio companies from the ashes is more than they want to spend.

Nevertheless, during such times, Knab says the Utah 100 is and has been a beacon of inspiration to Utah companies. “There are amazing stories amidst the doom and gloom scenarios,” he says. “The Utah 100 is a magnet to attract stories about companies that are accelerating through bad times. You want to hear these stories. You want to know that there are companies around us in Utah that are skyrocketing. It tells you it can be done and is being done.”

The Utah 100’s Expanding Reach

“The Utah 100 has become the premier recognition event for all segments of the business community,” says Utah 100 founder John Knab. Though the program started as a way to laud the fastest long-term growers in Utah — which tend to be mid-market companies — it soon became apparent that other segments of the state’s business scene should be represented as well. Over time, the Utah 100 has expanded to spotlight both startup ventures and large, established firms.

Emerging Elite companies are those ventures that show the appropriate growth and promise for the future, but haven’t yet reached five years of revenue generation. Companies that have made the jump from Emerging Elite to the Utah 100 proper include Skullcandy, American Liberty Insurance and Cymphonix. The Emerging Elite isn’t a ranked list like the Utah 100, and because the companies considered for it often can’t be compared strictly according to data, the decision of which companies to spotlight is more subjective. “We’ll take all the applicants and the committee will interview them and gain an understanding of their business, look at their revenue so far, the various accomplishments of the company and the capital they’ve raised and make an assessment based on various factors what the potential of the company is,” explains Steven Stauffer, Utah 100 chairman.

The 15 Top Revenue Growth list is made up of companies that post huge year-over-year gains regardless of time in business. It’s purely based on how much revenue a company takes in a given year. As a consequence, companies listed among the Top 15 are often the economic juggernauts that drive commerce within the state. Names like Questar and Zions Bancorporation (Nos. 1 and 2, respectively) are effectively mainstays, while companies that experience explosive growth, such as No. 3 MonaVie, can break into the list with a single good year.

#1: MonaVie

According to Dallin Larsen, founder, chairman and CEO of MonaVie, a key to success in direct sales is to have a simple story to tell. Give your distributors too many products to sell and therefore stories to tell, he says, and “distributors get confused and have to become scientists.”

MonaVie’s story is pretty straightforward. The company produces a line of fruit juices, each a blend of 19 South American fruits that are considered exotic in most markets. But rather than give each fruit equal billing, MonaVie weaves its story around the açaí fruit. Harvested from the açaí palm, which traditionally supplies the world’s salads with hearts of palm, the grape-sized, purple-black fruit is purported to provide various health benefits.

The importance of product notwithstanding, Larsen says that direct selling is “more than anything else” a relationship business. “Companies like MonaVie will rise and fall on their ability to create and maintain very strong, deep relationships with their distributors,” he says. “As long as you keep your word with them, as long as you’re honest, as long as you reward them, as long as you trumpet the fact that they’re the most important part of this company — they’ll move heaven and earth for you.”

Speaking of distributors, Larsen says MonaVie has enrolled more than 1 million since 2005. Direct selling — known also as multi-level marketing — thoroughly relies upon such numbers. It’s an industry often met with skepticism, but Larsen believes that “direct selling is coming of age.” He points to Warren Buffet’s purchase of Pampered Chef a few years ago. “That was a turning point in direct selling,” he says. “A lot of the naysayers looked at that and said, ‘Wow if perhaps the savviest investor in the world wants to invest in a direct selling company, then maybe there’s more to this as a business model.’”

MonaVie encourages its distributors to give back to the Brazilian communities that cultivate and harvest the açaí fruit through the MORE Project. Founded as MonaVie Operation Rescue and now a standalone nonprofit, the MORE Project raises millions of dollars to help better the lives of children living in poverty. In the process, MonaVie helps ensure a sustainable harvest of the açaí fruit for years to come.

#2: Skullcandy

When faced with the recession, Park City-based Skullcandy made a bold move by introducing products not slated for rollout until 2010 and 2011. “We decided, hey, just open up all the floodgates,” says CEO Rick Alden. Doing so helped land the company not only on the MountainWest Capital Network Utah 100, but also the 2009 Inc. 500/5000, where the company placed at No. 14 — the highest of the 78 Utah companies on that list.

New product categories (iPod speaker docks), new distribution channels (AT&T and other wireless stores), some international growth — these were among the plans that were successfully fast-tracked. There was a concern about whether Skullcandy had the bandwidth to make all the introductions without under-serving any one of them, but Alden says the goal was to exit the economic downturn with “all eight cylinders already firing.”

Skullcandy’s is not a recession-proof industry by any means, but the company has benefited from recent product introductions by Apple. “We do have the fortune of when Apple does a new release … there’s a high attachment rate to buying new [iPhone or iPod] accessories like a pair of headphones,” says Alden.

Fast-tracking notwithstanding, there’s still a full pipeline of product initiatives that build upon recent introductions and planned introductions alike. Alden says that every time you clear one product from the pipeline there are five more behind it. With the amount of products Skullcandy wants to introduce, it has increased its dependence on outside product design firms to augment its in-house capabilities. Alden explains that it might cost “twice as much” to have an outside firm help get a product to market, “but we make up the difference by getting that product to market sooner than had we waited for the internal bottleneck to clear.”

Skullcandy continues to fill positions. Alden estimates that he and president Jeremy Andrus spend about 40 percent of their time recruiting. Right now they’re looking to fill the position of vice president of international sales to better serve their increasing foreign customer footprint.

#3: American Liberty Insurance

Provo-based American Liberty Insurance opened its doors in 2004 when CEO Truman Child saw an opportunity to offer an alternative to the Workers Compensation Fund (WCF), which commands a 70 percent market share in the state.

“We identified a big need for businesses in Utah,” he explains. “Any time you’re dealing with a large competitor with large market share, there’s usually room for competition.” American Liberty Insurance continues to offer exclusively workers compensation insurance.

The WCF has served Utah employers since 1917, when it was founded as a state agency. Though no longer state run, it remains Utah’s insurer of last resort. Going up against such an entrenched competitor, Child says that one of his primary needs is to educate the market; because most businesses think that the WCF still is a state agency, they hold the misconception that the WCF is the only provider of workers compensation insurance.

Child has a goal of attaining a 5 percent share of Utah’s roughly $400 million workers compensation market, and says that already the company is within the top 10 in the state. He attributes the company’s success to price, service and the ability to deliver on those aspects. “We’re just a softer, kinder, gentler version of national carriers,” he says. “We’re small, so we can give that small business service a lot of business owners want.” Clients know, for example, that they readily can reach Child, who takes a hands-on approach to serving customers.

American Liberty Insurance is thus far authorized to do business only in Utah, though it has partnered with some national carriers that allow it to write policies in neighboring states. “We’re at an exciting point in our company’s growth,” says Child. “We’ve built a track record in Utah and our vision and goal is to expand regionally” — by entering into markets in Arizona, Nevada, New Mexico, Idaho and Colorado.

#4: VMI Nutrition

VMI Nutrition, founded in 2003, provides what it calls “custom nutritional formulation, blending and packaging,” and operates within an industry that managing partner Bruce Remund says weathers a recession better than many. “I always define the nutrition industry as single-digit growth and steady,” he explains. “It’s not about huge spikes and drops … it’s just steady.”

The company’s focus is nutritional powders, which it manufactures for roughly 30 name-brand clients whose sales channels include the likes of Costco, GNC and various direct-selling networks. It formulates about 300 products, using upwards of 600 raw ingredients. Protein powder is a major product line, and the company also makes fiber and sports-related powders (pre-workout and recovery, for example). It employs 125 people in a facility that soon will expand from 60,000 square feet to 80,000 square feet. Revenue for 2009 is projected to be $30 million to $40 million.

Jeff Reynolds, who manages the company alongside Remund, explains that there are two basic components to a nutritional powder: a base formula of raw ingredients, such as vitamins and proteins, and a flavor system. Whereas the former is readily revealed on the label of ingredients for the world to see, the latter is what Reynolds characterizes as the equivalent of intellectual property. “The flavor system is kind of the secret sauce” that helps differentiate VMI Nutrition from its competitors, he says.

Other factors set the company apart. Remund and Reynolds are well-versed on FDA requirements and use that knowledge to help customers navigate the “minefield” of those regulations, for example, and VMI Nutrition can efficiently package its powders in whatever container the industry demands, be it bottle, can, bag, “stick pack” or more. “We can bring [customers] solutions instead of issues,” says Reynolds.

VMI Nutrition flies below the radar, a fact in part attested to by a “website under construction” homepage. But as Remund explains, that meshes nicely with the company’s mission to act as an extension to its clients. The brand story is theirs to tell; it’s VMI Nutrition’s role to “do the rest” through its top-notch formulation, flavoring and packaging.

#5: Interbank FX

With customers in more than 150 countries, online forex broker Interbank FX relies upon its global reach to help it weather the economic storm of any particular market — such as the United States recession. At the same time, chairman and president Todd Crosland suggests that worldwide market volatility is also a boon to the company’s coffers, in that Interbank FX earns revenue every time a customer makes a trade. “Last year our customers traded three-quarters of a trillion dollars in trading volume,” he says. “We made just a little tiny percent when they trade, but with more trades it just adds up.”

(Forex is the common name for the off-exchange retail foreign currency market. A trade in this market occurs when one currency is exchanged for another based on the current rates of the two currencies involved.)

Interbank FX is based in Salt Lake City, where it employs 170 people. It has offices in Beijing and Seoul, each with a staff of about 10, and by the end of the year it’ll have a similar presence in London.

Roughly half of the headquarters’ staff is employed in some aspect of IT, a testament to the prominent role that technology plays in growth at Interbank FX. It recently spent $2 million on a new data center in New Jersey, a move that contributed to reducing customers’ rejection rate to 1 percent. “Some of our competitors have upwards of 12 percent rejection rates, so this investment in tech has been very beneficial,” says Crosland.

Technology is also the foundation of the company’s customer-focused business model. “We try to build tools and technology for our customers to help them become successful and profitable,” Crosland explains. “As they continue to be more successful and profitable, then Interbank FX will have the same benefits.” Crosland says the company plans to upgrade its order routing and trading platforms within the next year or so to improve upon its already strong customer service — the industry has named it the No. 1 Forex broker in the world for two years running. Rounding out its customer service offerings is IBFXU, its free online Forex training resource.

Crosland says that the company was “built by forex traders for forex traders” and still trades approximately $40 million to $50 million every day. “We know what our customers want because we’re our customers as well,” he says.