Fantastic 4

Fantastic 4

The current state of the economy can put a frown on even the happiest of entrepreneurs. But not every Gulf Coast company is suffering.

companies by Mark Gordon and Dave Szymanski | Staff Editors

For an entrepreneur who runs a three-person company out of a home office in Tampa, Terje Gronlie sure has some pretty big customers: Among his biggest are retail stalwarts such as Wal-Mart, Lowe's and QVC.

And it's not as if Gronlie, whose first name is pronounced Terry, invented some new kind of pencil or somehow improved the proverbial mousetrap. Gronlie's core product? Patio mats. His company sells mats for outdoor use, such as ones for RVs and picnics and mats for indoor use, in places such as family rooms or lanais.

But Gronlie might as well be minting money, as his company, Tampa-based patiomats.com, has grown 609% over the last three years, from $468,600 in 2004 revenues to $3.3 million last year. "It has been a good steady business," says Gronlie, "with a couple of enormous orders."

Enormous indeed. But no where near enormous enough, because even with a that eye-popping growth rate, patiomats.com is on the outside looking in at the annual list of Inc. magazine's 500 fastest growing companies, which are tracked by revenue growth from 2004 to 2007. The list is comprised of U.S.-based privately held companies with at least $200,000 in 2004 revenues and $2 million in 2007 revenues. Subsidiaries or divisions of larger companies are excluded.

Of those top 500 fastest growing companies, four of them are based in Tampa Bay. And another 67 Gulf Coast-based companies are on the Inc. 5,000 list, which is an extension of the Inc. 500, published only online. In total, 263 Florida-based companies made the Inc. 5,000. (See related story.)

The eye-popping growth percentages for all the Gulf Coast companies on the list are telling signs of survival and prosperity, not only for the companies themselves. It's also an encouraging sign that even in an economy that seems to be teetering there are pockets of companies that are still growing.

Here's a peek into the inner-workings of how the four Tampa-area companies on the Inc. 500 list are getting it done.

ForeclosuresDaily.com/#35

Just like its name says, Largo-based ForeclosuresDaily.com specializes in daily foreclosure research.

A key niche for the company has been its software that allows potential investors to track mortgage foreclosure lawsuits and other essential foreclosure data online on a daily basis for a monthly fee - which starts at about $150, depending on the length of the contract. The company also offers training and a full range of support for investors seeking both entry and long-term success in the foreclosure market.

ForeclosuresDaily.com is a research-only operation: It doesn't compete with clients by using its data to buy foreclosed homes.

So with foreclosure rates nationwide increasing at unprecedented speeds, it fits that a company specializing in foreclosure research is high on the Inc. 500. And while that's true of ForeclosuresDaily.com, the company's president, Mike Kane, doesn't always talk like an executive running a $14 million business that has grown 3,834% over the last three years. The company had $366,000 in 2004 revenues.

Instead, Kane, who co-founded the company in 2003 with two other entrepreneurs, sprinkles words such as slowing down, curtailing and holding off with startling regularity for a company that's grown so much, so fast.

Kane is certainly pleased with the company's growth, which he attributes to moving into several new geographic markets in 2007. The company has gone from being exclusively in Florida and a few North Carolina counties to having full offices in foreclosure market hotbeds such as Las Vegas and Phoenix.

But Kane says the economic downturn "affects us too, just like everyone else." That affect is manifesting itself in two ways: First, the company's core customers, home-buying investors, aren't as cash-flush as they were a few years ago. That has put a damper on revenue growth in 2008.

And second, the company is seeking outside capital to fuel more growth. But, no surprise, that side of the economy is also hurting, even in a trendy subsection of real estate such as foreclosures. "We are trying to re-invest heavily into our business," says Kane, "but capital for the expansion has been a challenge."

Kane's wish list, if and when the company receives outside financing, is to grow in more geographic markets, utilizing the same business model it started using in Pinellas County when it debuted in 2003. California, for example, is one place Kane would like to be.

The long-range business plan Kane established with his partners, hashed out over a 2003 meeting at a Clearwater Starbucks, relies on continued fast-paced growth. He hopes to go public someday, possibly by selling to an already large publicly traded company.

"I love creating, taking a concept and growing it," Kane said in a 2006 story about ForeclosuresDaily.com. "You don't get rich working a business."

Advanced Interactive Sciences/#115

If Oldsmar-based Advanced Interactive Sciences were to carry a mantra, it would be that they prefer to be heard and not seen.

Behind-the-scenes thinking like that has put the company on a phenomenal growth track, increasing revenues 1,764% over the last three years, from $880,000 in 2004 to $16.4 million last year.

At its core, AIS serves as the company that handles the inbound sales calls for other companies. It does that by using an interactive voice-response system with an intuitive speech technology platform. That means the system can understand and respond to human speech, including dialects.

So when customers call to place an order, they are greeted by a robot voice, called a virtual agent, who translates the call into a sale. While not a live call, it eliminates hold time and dropped calls, resulting in higher customer satisfaction, AIS says.

That is the goal of AIS. Now six years old, the company, which has been profitable every year, was founded with the goal of trying to find a better way to close orders by making the sales process more efficient.

"When we control the quality of the script, we have a better consumer experience," says AIS chief executive officer Michael Ferzacca. "It all amounts to all good things for the consumer."

AIS President Douglas Winslow founded the company and brought Ferzacca in as an investor and board member. Ferzacca, 51, became CEO three years ago. Since joining the company Ferzacca has reached out to Baltimore-based venture capital firm ABS Capital Partners, a firm he knows from past ventures. ABS invested in AIS last year and now owns a minority stake in the company, in addition to a board seat.

Ferzacca's main change as CEO has been to shape AIS as less of a service provider and more of a marketing partner with clients.

"When you call in to buy," Ferzacca says, "we reinforce why you are buying and drive up revenue."

One big differentiator for AIS is its work in predictive buying behavior for customers, based on demographics. The company is able to give callers appropriate offers to make them more likely to buy.

AIS has about 200 million names in its database and about 100 buying characteristics in the same database. Understanding buying behavior focuses on four to five characteristics. AIS matches up clients' products to buying characteristics of consumers, so the sales process is pleasant and opportunistic.

Says Ferzacca: "If done inside the model, we give them the most aggressive offer available."

Agile Thought/#160

The hyper-competitive IT services market on the Gulf Coast is filled with small players, many of which focus on helping similarly small businesses.

But when software engineers and longtime friends John Wagner, Ryan Dorrell and David Romine founded Tampa-based Agile Thought in 2004, they set out building a custom software company that would focus on helping large firms become more IT-efficient.

The trio met while working for Arthur Anderson in the mid-1990s and later worked together at the Tampa office of PriceWaterhouseCoopers. It was at PWC where the group met Steve Horan, who became a fourth co-founder of the company.

So far the company has hit a nerve in the marketplace. It has grown revenues 1,404% since 2004, from $226,000 in 2004 to $3.4 million in 2007. It expects to have $5 million in 2008 revenues.

Agile's executives say its formula for succeeding in a crowded marketplace revolves around its ability to build relationships with clients, which works mostly because many of its employees are former IT staffers at other big companies.

"We're there at the request of the [chief information officer] to partner on a project," says Wagner, Agile's CEO. "Most of our people are out of internal IT. We were sitting in those companies, building applications for those companies."

Agile's clients are all over the country, including a few in the Tampa area, such as OSI, parent of Outback Steakhouse. To serve such a geographically diverse customer base, Wagner works out of a St. Louis office, to be closer to the company's Midwest clients.

The main challenges for Agile have been having enough operational funding and being efficient itself.

"One dirty old secret, while we helped other companies be efficient, we neglected our own," Wagner says. "It is the cobbler's children syndrome. We were pretty darn inefficient. The good news is we recognized that."

The biggest lesson Agile has learned is how to be patient with growth.

"It wasn't that we went from three to 30 people in a month," Wagner says. "We looked each other in the eye when we needed to grow. We made sure each move was a good one. We always were doing it on our own pace. That got us to where we are now."

Drain Doctors/#498

The collapse of the Gulf Coast residential real estate market took its tool on Ryan Pelky's friends in the plumbing and home repair services industry.

But not Pelky, CEO of Tampa-based Drain Doctors, a plumbing repair company with clients in most Florida markets, including Tampa Bay, Southwest Florida, Orlando, Jacksonville, Fort Lauderdale and Palm Beach.

"Friends of mine, in business for five years, major players, they are done," says Pelky, 29. "They have filed for bankruptcy once, changed their name and filed again. Not just in plumbing, but in electrical. They suffered just like new construction guys did. Plumbers, electricians, framers and contractors."

Pelky believes the reason Drain Doctors survived - and prospered - during the tough times is because it knew the commercial market. Many of its competitors did not.

"It is very difficult to transition to commercial," Pelky says. "They are very different customers to service properly."

Commercial plumbing is how the company got its start, when Pelky, a Michigan native whose father is also a plumber, founded the business in 2002. By 2003 he had three employees, including himself.

But Drain Doctors took advantage of the hot homebuilding market from 2003 to 2005 to expand throughout most of Florida. From 2004 to 2007, the company's revenues increased 767%, from $330,000 in 2004 to $6.5 million last year.

But this year, Pelky sees flat growth. That doesn't surprise him.

"When new construction fell off the map, thousands of plumbers had to find work," he says. "Now they have to run service calls. The companies that are striking a balance between residential and commercial, those are the companies making it now."

For instance, Drain Doctors has picked up some key corporate accounts, including Wal-Mart. "That's why we've been able to stay in business," Pelky says.

Drain Doctors also offers a variety of plumbing services including pipelining, which is where its name comes from. In pipelining, instead of repairing an old failing drain, which involves excavating, Drain Doctors puts a new pipe inside it.

In the next five years, Pelky sees Drain Doctors going nationwide or selling franchises. Until then, Pelky plans on continuing to grow his company, which has a decidedly family-feel to it: Besides Pelky's father, Jim Pelky, who runs the Jacksonville office, Ryan Pelky has employed other family members. His uncle, Ed Tompkins, is the company's chief financial officer. His cousin, Jeremy Tompkins, runs the southeast Florida office. His brother, Brandon, is a senior field supervisor for the Tampa Bay operation.

"With family, there is trust, being able to count on the people you work with," says Ryan Pelky says. "You don't want to let each other down."

Ryan Pelky is also hoping to prop up the entire plumbing industry through building a professional company with a stellar reputation.

"We are trying to do what we can to change the nature of this business in this state," Pelky says. "When you think about plumbers, the image may be a negative one. [But] fortunately, many are very intelligent problem solvers. They can contribute to society like a lawyer or doctor. There is also the income potential there. But they have to be a professional."

REVIEW SUMMARY

Businesses. ForeclosuresDaily.com; Advanced Interactive Sciences; Agile Thought; Drain Doctors.

Trend. Four companies on Inc. magazine's list of the 500 fastest growing companies in the country are based in Tampa Bay.

Key. Companies have grown in spite of the slumping economy.

BY THE NUMBERS

Foreclosuresdaily.com

Year Revenues % growth

2004 $366,000

2005 $2.9 million 692%

2006 $5.3 million 83%

2007 $14.4 million 172%

Total three-year growth: 3,834%

Three-year avg. annual growth rate: 316%

Source: Foreclosuresdaily.com

Advanced Interactive Sciences

Year Revenues % growth

2004 $880,000

2005 $5 million 468%

2006 $12 million 140%

2007 $16.4 million 37%

Total three-year growth: 1,764%

Three-year avg. annual growth rate: 215%

Source: AIS

Agile Thought

Year Revenues % growth

2004 $226,000

2005 $1 million 343%

2006 $2.2 million 120%

2007 $3.4 million 55%

2008 $5.0 million*

Total three-year growth: 1,404%

Three-year avg. annual growth rate: 173%

Source: Agile Thought *(projected, based

on actual revenues through 8/31/08)

Drain Doctors

Year Revenues % growth

2004 $750,000

2005 $1.5 million 100%

2006 $4.9 million 227%

2007 $6.5 million 33%

2008 $6.5 million*

Total three-year growth: 767%

Three-year avg. annual growth rate: 120%

Source: Drain Doctors *(projected)