KIWI STORY: Christchurch firm tastes growth from the outside-in

Christchurch-based Intranel started out as a group of engineers “building a lot of cool things and not knowing how to sell them”. Seven years on, the company has been listed as the third rank-holder in Deloitte’s 2013 listing of NZ’s Fast 50 firms with a growth rate of 878.08 per cent.

Mindboggling as that growth is, the company started out as a set of people that brought out iterations of products, among them ones for video transmission, video processing and video analysis, that didn’t really get any purchase in the market.

Things changed with the formation of VisionsLive, Intranel’s fully-owned subsidiary that produces solutions for market research agencies looking to create and engage with online communities.

“Two years into Intranel, after building a lot of cool things and not knowing how to sell them, we made a bit of a change. We went down to London, and we created VisionsLive to market and sell our range of products for the online qualitative research space,” says Dave Sanders, co-founder and technical director at the firm.

VisionsLive products allow market research agencies to perform qualitative research online, and agencies can use them via a subscription model, or a pay-as-you-go option.

“Agencies can run online communities, online focus groups and online bulletin boards with our products. We provide white-labelling facilities. Agencies can add their branding to these products, so it looks like their platform, instead of ours. Recently we have seen a lot of interest in social media and mobility. We have got mobile apps for our products. They probably haven’t had as much usage as interest, but they certainly open a lot of doors,” says Sanders.

London was a strategic choice for the firm, since there were “more market research agencies in London than probably all of New Zealand.” Two of the founders worked out of London to grow the market, and then hired more people on the ground to help them with sales and marketing. Now VisionsLive has around 23 people spread across the world, including 15 people in Lancaster, UK, and two people in the US market.

“We are seeing increasing traction from the US market. We have just secured a very major customer there who seems to be doing a lot of groups. We didn’t focus on the US market till about six months back, but we are really looking to use our momentum to spur more growth in the US,” says Sanders.

Intranel, the parent company, focused its energies on two streams – consulting and contract software development, and building products for VisionsLive. One of Intranel’s more famous customers for its consulting and developing stream is the Royal Bank of Scotland (RBS) for which it built BizCrowd, an online community for small businesses. The company beat the likes of IBM to land that contract.

No smooth sailing

According to Sanders, the biggest challenge for the firm, which was funded entirely by the initial seven founders, was working out how to sell the products.

“We built some really cool things in the early days and if we had figured out how to sell and distribute them we would have probably done better earlier. But being a group of engineers we definitely had failings in our sales and marketing efforts. That’s why we made a change with VisionsLive.

“We haven’t really operated too well in the Kiwi market. Lots of companies start locally, sell here and then expand overseas. We started the other way around. We went to the UK and started the company there. Guess a big part of that is moving out, making the decision and then following through on it,” says Sanders.

According to him, it helped tremendously that the company had a niche target market, which helped it focus energies specifically on the sector.

While it is better settled into the markets it addresses now, Sanders says challenges have not gone away – they have just changed shapes.

“It was cheaper to develop software in New Zealand rather than UK at that time. Now it is actually the other way around. It is cheaper to hire developers in UK than in NZ. The advantage over there also is that the UK still has R&D tax credits, whereas NZ does not have that any longer.

“We are an expanding company and we have been for the last few years now. And it’s a tough decision to try and keep our development here rather than hire more in the UK. In most ways it is cheaper and more efficient there than here,” says Sanders.

He points to the shift in the exchange rate, and the talent shortage in New Zealand, particularly in Christchurch, as the two main reasons for software development to become more expensive on home ground.

“It is very difficult to find experienced people here at a reasonable prices. There is a lot of the bigger companies that basically pick up all the young talent from the universities as well. And then sometimes you get young people in, you train them and then someone else poaches them.

“To try and get any level of people for the positions we are after, which is basically .Net developers, is very difficult. You can do it, but you have to pay a fortune,” states Sanders.

Nevertheless, the company will continue to hire in both UK and NZ, even as it debates economic efficiency and productivity.

Forge ahead

The firm has been in reasonably good financial shape for some time, and is not actively looking for funding options, according to Sanders.

“At the moment we are growing organically, and not looking for external funding. We have considered it but not really gone out and searched for it. If someone comes along and says they would like to put some money in and see us grow, I don’t think we would say no. One of the challenges is that you are so focused on what you are doing and it is hard to take a step back, sort of look at the company from an overview point of view, spend time on it and make it happen,” says Sanders.

Meanwhile, it is full steam ahead for the firm.

“For VisionsLive we are currently rebuilding our entire product platform. We are enabling our platform to be the one platform for online market research. We built a number of products that market research agencies can use. Now we are combining all into one main thing, where people can come to that and tick what they want to do, and do it all through one platform instead of separate products,” says Sanders.

The platform’s first release will take place early next year.

As for Intranel, the company will look for more consulting and contract development jobs both in New Zealand as well as the UK, based on the success it has had with RBS.

“One of the difficulties at the moment in NZ in particular is that most of the larger contracts go through the government system. It is very difficult to get a foot in the door there and be a supplier. And also it takes an awful lot of work putting a bid together for one of those jobs. But we have been looking into that,” says Sanders.

The firm is also working on a potential product in the recruitment area, even as it partners with other providers to offer solutions focused towards the country’s primary agricultural and farming industries.

“We have got a number of things on the go. There is no shortage of things to do,” concludes Sanders.

Kiwi Story is where we profile interesting and fast-growing tech firms from New Zealand. If you know of an innovative firm from anywhere in the country that you think should be covered in this section, please email sathya_ashok@idg.co.nz with details.