Tech firms find opportunity in recession
9/4/2009

As appearing in Providence Business News

By Bridget Botelho
Contributing Writer

Most technology companies in Rhode Island have felt the recession, but there are a handful that have experienced tremendous growth during the downturn. And those companies appear to share a common strategy – despite the recession, they have been focused on growth.

This recession has not had as large an impact on technology companies as the one following the bursting of the tech bubble and the Sept. 11, 2001, attacks, said Jack Templin, co-founder of Providence Geeks and program leader for RI Nexus. Companies have continued to invest in technologies that drive their business.

“The recession of 2001 was really a full-on depression for our sector. But we learned those hard lessons in 2001 and have fared well this time around,” Templin said.

One technology company that has thrived in this environment is Focus Business Solutions of Johnston. The 10-year-old company ranks fifth on Providence Business News’ 2009 Fastest-Growing Private Companies list, ranked by two-year sales-growth percentage, with $1.2 million last year, up almost 250 percent compared with $345,000 in 2006.

Gil Lantini, a founder and president of Focus Business Solutions, said he grew the company through the recession by out-pricing the competition and positioning it as a one-stop shop; they do everything from logo designs, Internet marketing and Web site design, and they are also a print shop that sells apparel and marketing items for clients.

Pricing is especially important in this economy and has helped Lantini get into a lot of doors, he said.

“People do shop on price, I don’t care what anyone says. If our pricing is 40 percent less than the other guy, I’ll get a shot and then when I show the customer good quality, they will come back,” Lantini said.

That approach continues to be successful for Focus. The company, which has only nine employees, has done better every single month this year compared with last year and is 40 to 50 percent ahead of where it was last year at this time, Lantini said.

Focus Business Solutions is also doing well because many companies are migrating from print and direct mail marketing to Internet-based advertising and Web sites, and the economy hasn’t slowed Focus’ clients’ advertising expenditures much, Lantini said.

"We are finding that smart companies are still spending money on advertising – you need to spend in a down company to keep your name out there, and those companies are growing,” Lantini said. “If you aren’t advertising, you are losing business.”

Ironically, Lantini hasn’t done much advertising himself. About 90 percent of Focus’ clients are Rhode Island-based companies, and all of its business has come through word of mouth and local networking groups.

Nineteenth on the list of fastest-growing private companies is Exeter-based systems integrator Carousel Industries of North America Inc. The company saw $147 million in revenue in 2008, compared with $101 million in 2006, a 46 percent gain.

Carousel has not been insulated entirely from the recession; the company experienced its first-ever drop in revenue – an approximate 5 percent decline – during the first quarter of 2009, said Jeff Gardner, chief executive officer of Carousel. The company’s response to that slump was to prepare for the uptick that was sure to follow by hiring more employees, he said.

“We have experienced tremendous growth for the past five years, so we used the recession as an opportunity to breathe and prepare for the next round,” Gardner said. “Even though business was down, this is still a $35 billion market … and there were a lot of talented people out there who had lost their jobs, were laid off by our competition. So we hired them.”

So far this year, Carousel added 100 employees dispersed throughout the company’s 20 U.S. offices, pushing its headcount over 600.

Bulking-up its sales force worked; Carousel showed 10 percent growth over first-quarter figures, and the company landed a handful of major accounts, including the U.S. Navy and McDonalds, Gardner said.

“The people who explain things the best to the customer and show them a hard return on investment (ROI) are the ones who do well. And those are the people we have here,” Gardner said.

Like Focus Solutions, Carousel positions itself as a one-stop shop. “That is critical, especially in our field. … When something breaks, we can raise our hand and take care of everything,” Gardner said.

Ranking 20th on the list is Atrion Networking Corp. in Warwick. The company gained 41 percent when revenue went from $28 million in 2006 to $39.6 million in 2008 by holding to a strategy that kept it afloat through three other recessions; strong relationships with customers and employees, said Atrion’s Chief Technology Officer (CTO) Christopher Poe.

Atrion weathered the dot-com bubble burst in 2000, the economic decline after the 9/11 attacks, and was, in fact, founded during a recession in 1987. “We grew our business through each, and this time is no different,” Poe said.

“We get close to our customers and even more so when times are tough,” Poe said. “Typical [Value-Added Resellers] run to where the shiny objects are and abandon their customers when there is no money on the table. We don’t chase the shiny objects.”

Like the other successful technology companies, Atrion continues to add and invest in employees. It has added at least 20 new jobs in the past year, bringing the total employee base to 160, and the company continues to invest in employee training, Poe said.

Atrion isn’t cutting back on technology investments of its own, either, and is in the process of implementing new tools that will keep the company competitive, Poe said. “Some people say it’s crazy to invest in these things at this time, but we don’t think so.”

Other technology companies in the state showed gains as well, including Tele-Consultants Inc. of Middletown, which ranks 58th on the list. Its 2008 sales were 13 percent greater than the $19 million in 2006, rising to $21.5 million last year.

The R.I. Economic Development Corporation (EDC) looks at these companies as proof positive that the state’s technology sector is faring well despite economic issues.

“[They] are bright spots in a tough economy and … proof that Rhode Island’s information technology industry is weathering the storm,” said J. Michael Saul, interim executive director of the EDC.

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