Valley Companies Soar to Success

The fastest-growing private companies in the San Fernando Valley region grew an average of 85.6 percent in the last three years. The growth rate for this year’s List was slightly less than last year, when companies grew an average of 90.49 percent. However, more companies made the List — a potentially good sign despite the continuing gloomy economic news. There are 60 companies on the List, up from 40 last year, and 41 of the companies on this year’s List were not on the List last year. We also raised the bar for being able to qualify for a ranking. All of the companies grew at least 8 percent, which was the cutoff. Companies on this year’s List had a combined total of $2.21 billion in revenue, or an average of $48.07 million. The range, however, was quite broad. The largest company to make the List was Wesco Aircraft Holdings, an aerospace services company that grew 8.6 percent to $656 million, while the smallest company, Glendale-based AltruIT, a small IT services company, barely made it over $1 million. But these companies did not necessarily translate their growth into jobs. Only 12 companies added a dozen or more workers, while 8 actually let people go. Most companies kept their workforce steady or added only a handful of new workers. Not every Valley company was able to provide comparative employment data for last year and this year. Of those 56 companies who provided the data, the total number of new employees in the Valley came to 410. The growth was more robust companywide, with 865 jobs added. National Positions of Agoura Hills added the most jobs, with 250 employees companywide, though most of those hires were in India. Glendale-based Software Management Consultants Inc. followed closely behind with 158 new employees. Experts say the caution is par for the course given these uncertain times. “That is not a sign of a real robust recovery,” said David Smith, associate dean of academic affairs and associate professor of economics at Pepperdine University’s Graziadio School of Business. “It’s a sign of real caution on the part of even the fastest-growing companies.” In a more vigorous economy, companies would be producing one new job roughly for every $100,000 in added revenue, Smith said, although it’s very hard to generalize across different industries. As one would expect, the List is heavy on technology companies. Several cloud computing, IT consulting and software development companies made the List, including Cystems Logic, with a three-year growth rate of 166.7 percent and GBL Systems, which provides systems engineering and software development for the U.S. Armed Forces. It grew 72.7 percent over three years to $5.7 million. Topaz Systems Inc., which manufactures electronic signature capture software and hardware, grew 64.2 percent over three years to $41.7 million. The List is also populated by several online market research, advertising and web design companies that make their home in the Valley, attracted by the talent spun off from larger public companies such as ValueClick Inc. that are also headquartered here. Last year’s fastest growing Internet advertising company, ReachLocal Inc., is no longer on the List because it went public. It would not be surprising if that plan were back-of-mind for others such as National Positions, No. 8 on the List, growing 165.9 percent over three years to $10.9 million in revenue last year. Driving business at National Positions and other Internet advertising firms is the tremendous growth in small mom-and-pop businesses that need to establish an online presence and then rank high for local searches. “Almost everyone now uses the Internet or their smartphone to find a local business,” said founder and CEO Bernard May. “When was the last time you opened the Yellow Pages?” At the top of this year’s List was Encino-based uSamp, an online market research firm with a three-year growth rate of 1,050 percent. The company went from $2 million to $23 million in the worst economic years since the 1920s. It’s fair to call that a feat. Business uncertainty was actually good for this company, as more businesses looked to survey consumers in search of their sweet spot. One characteristic that many of these companies share is that they require little capital, or even large numbers of people, said John Shearer who teaches in the entrepreneurial program at Graziadio. It’s typical of entrepreneurial companies these days, he said. They can operate very efficiently. “They can grow revenue without having to reinvest that much in capital, infrastructure or even people,” Shearer said. “The return on growth can be very high.” Indeed, very few of the Valley’s fastest-growing companies are large employers. The largest overall is Sherman Oaks-based Prospect Mortgage, an independent retail and residential mortgage lender, with 487 Valley employees and 1,567 companywide. uSamp added 96 people this year to handle $14.4 million in new business, said CEO and Co-Founder Matthew Dusig. But the company was very cautious about hiring. Dusig said he adds only two project managers for every million dollars in revenue. “We don’t want to over-hire and then lay off,” he said. AltruIT, an IT company that provides cloud computing services to nonprofits, hasn’t added any employees this year. The Glendale firm employs nine people —five of whom are in the Valley. CEO Miles Dapsauski said he hasn’t hired additional employees because he was concerned about the economy, despite growing 20 percent from 2008 to 2010. Especially frightening, he said, was that the company did not know if funding for nonprofits — the firm’s main clients — would be around. The company plans to finally add one or two employees by the end of the year. Helping companies deal with the uncertainty of hiring is what’s fueling the growth of so many staffing agencies, which was also a high-growth business in the Valley this year. Companies such as Canon Recruiting Group take the risk out of hiring. They make it possible for a company to hire someone for three to six months, and not incur any permanent expenses with that new hire, including wages and health or workman’s compensation insurance. Santa Clarita-based Canon Recruiting was the third fastest-growing company in the region, with three-year revenues up 241.1 percent to $5.4 million. While the company employs 20 full-time workers in its office, it employed 350 people on behalf of other employers, adding 100 jobs. MedExec International, grew 278 .6 percent over three years to $2.68 million last year, placing temporary and full-time workers in the growing biotech, diagnostics and pharmaceutical industries. Besides these, the List is a healthy mix of companies and industries, doing everything from selling film equipment to Hollywood, resolving student and IRS debt, manufacturing high-end microphones to creating innovative hair products for women with curly hair. It’s a diverse List, and some say that diversity may be an asset as the Valley looks to recover from the longest and most challenging economy since the Great Depression. For now, at least among these companies, there is plenty of optimism. As AltruIT’s Dapsauski summed up: “Our customers aren’t pulling back anymore. They are recognizing new realities are and are starting to spend.” Staff Reporters Mark R. Madler and Andrew Khouri contributed to this report. Download the Fastest Growing Private Cos list (pdf)