BY BEN JACKLET
They’re into strong markets and they know exactly what they’re doing. They’re smart, they’re hiring and they’re poised to grow in the new year.
In an ideal economy, the majority of Oregon’s businesses would fit such a description. Not today. The Great Recession has upended the strong as well as the weak, forcing some of the state’s top performers to resort to cutbacks, mass layoffs and even bankruptcy.
But not every business has narrowed its focus to simply cutting costs in order to survive. Some savvy companies are embracing the impending arrival of 2010 with powerful optimism. In the free verse of Ziba Design president Sohrab Vossoughi, it’s a matter of planets lining up. In the technical jargon of TriQuint CEO Ralph Quinsey, it comes down to the inevitable progression from 3G to 4G to 5G and beyond.
Of course, it’s easy for those two guys to wax positive, with their fortuitous connections to a California company named after a piece of fruit. But other Oregon business leaders have equally compelling reasons to gloat. They caught their respective trends early and tapped into growing markets with huge potential, and they’re gobbling up market share.
The forecast for the state’s economy may call for sluggish recovery with frequent setbacks, but the outlook for smart phones, user experience design, healthy local foods, data archives, renewable energy and health care innovation is far from gloomy. Well-run companies filling these and other niches are the state’s best hope to create the sorts of jobs that will lead to recovery.
Niche: multiplatform creative design
Oregon employees: 100
Ziba Design founder Sohrab Vossoughi (pictured here at the Chinese Design Now exhibit at the Portland Art Museum) delved into user experience design and Chinese consumer research early. As a result his company is
PHOTOs BY LEAH NASH
“Being in the business of innovation is very good these days, and it’s going to get better,” says Sohrab Vossoughi, the loquacious founder and president of Ziba Design. “Companies may be able to buy their way to greatness for a while, but eventually they will need to deliver something unique to the DNA of the company and meaningful to the target customer.”
That rather nebulous pursuit is the core business of Vossoughi and the 100 well-compensated employees who work out of Ziba’s new headquarters in Portland’s Pearl District. Over 25 years they have broadened the definition of design to embrace everything from ergonomic keyboards and dialysis machines to bank lobbies in Portland and shoe stores in China. They won’t discuss ongoing projects, but clients have included Umpqua Bank, Microsoft, FedEx, Chinese footwear company Li Ning and Procter & Gamble. Ziba conducts deep research for their clients and collaborates with them on a multidimensional strategy that considers brand, website, retail space and packaging, as well as the product itself.
Keeping pace with Vossoughi as he explores the intricacies of his work requires aerobic listening. A small Iranian-American man of large gestures, he is constantly snapping his fingers, nodding his head and waving his arms as he launches into unexpected tangents and turns of phrase that cause him and his audience to laugh frequently. He never studied business; he has followed his intellectual passions to create a distinctive niche for Ziba, which is the Persian word for beauty. In a way, Ziba is an expanded manifestation of Vossoughi himself: free-thinking, open-minded and inherently international. He boasts that 27 different languages are spoken at Ziba. “That was a conscious strategy,” he says. “Diversity creates tolerance to new ideas. That’s one of the things our clients like about us, our ability to understand other cultures, whether it’s South America or Japan or China.”
Ziba’s investigative approach involves mixing teams of researchers native to the culture being studied with outsiders who bring fresh eyes. That has been the idea behind Ziba’s intelligence work in the most important of all emerging markets, China.
Its collaboration with Chinese companies such as Li Ning, Lenovo and television manufacturer TCL has earned the Portland company a deep understanding of one of the most sought-after consumer classes in the world: young, upwardly mobile Chinese. Ziba’s advantage in China comes from having researched trends there for 10 years, deploying teams of “cultural translators” to distill complex traditions into hard-to-define qualities such as intimacy, meaning and even love, then translating those findings into business strategies.
“China is changing at the speed of light,” says Vossoughi. “Not just the structures but the attitudes and behaviors. And we have more expertise in understanding China than anyone in our industry.”
If this typically bold declaration turns out to be true, Vossoughi and Ziba will keep importing good jobs to the Pearl District, which continues to reinvent itself as a bustling hub of creative employment led by independent icons such as Wieden+Kennedy, Powell’s Books and Gerding Edlen Development.
Niche: email archives and encryption
Oregon employees: 65
When Smarsh CEO Steve Marsh moved his nascent technology company from San Francisco to Portland in 2002, it was a four-employee operation. Today it is one of the fastest-growing companies in Oregon, employing more than 60 people and expecting to add another 30 to 40 jobs in 2010.
Marsh formed the company in response to new laws from the U.S. Securities and Exchange Commission regarding the e-mail archives of financial services companies. He developed a system for securely storing and managing vast volumes of emails, and demand for that service has flourished as emails have proliferated. Newer modes of business communication such as social media and instant messaging also mean new opportunities for Smarsh, as does the market for email encryption, which Smarsh entered in the spring of 2009. As the varieties and volume of electronic messages that can potentially be subpoenaed by law firms, requested by auditors or demanded by regulators grows, so grows the market for Smarsh’s services.
Marsh says he expects organic growth to land somewhere between 50% and 75% for 2009 and to continue at a similar rate through 2010. “The market for email archiving is going to explode over the next two or three years,” says Marsh. “When we started out our clients were all financial firms. Now our new sales are largely outside of the financial sector, as companies look to cut IT costs and mitigate e-discovery costs associated with litigation. We’re just starting to see the full market for our services.”
Smarsh is representative of a growing number of small, focused Portland metro tech companies that are lucratively exploiting new niches that they identified early and moved quickly to fill. Also fitting that category are Jive Software, which sells social networking software to businesses; Ensequence, which makes television interactive; eROI, which provides email marketing tools; and Monsoon, which designs software for online retailers.
Targeted tech expertise is growing in value in synch with the irreversible shift toward a faster, more complex and more interactive electronic world. And while email archiving may not seem like the sexiest of tech niches when compared to interactive TV or iPhone apps, securely storing and organizing the mountains of electronic information being generated at warp speed will become increasingly important. Smarsh senior communications director Ken Anderson points to a recent murder trial in Indiana where a MySpace page was ruled admissible evidence as a tip-of-the-iceberg example of a huge cultural shift with broad legal and business implications.
Given Smarsh’s outrageous rate of growth, it would seem a strong candidate to break Oregon’s IPO drought. Marsh says while he would not be against going public eventually, it is not in the short-term plan.
As for the long-term plan, Marsh says he intends to keep the business in Portland, where Smarsh has data centers, software support and a large pool of talented job applicants from which to choose.
New Seasons Market
Niche: locally grown specialty foods
Oregon employees: 1,700
New Seasons Market CEO Brian Rohter expects to complete the company’s 10th store in 2010, adding another 150 employees to the payroll as the demand for healthy, local food keeps growing.
PHOTO BY ADAM BACHER
When the darkest days of the recession hit Oregon a year ago, many people assumed that specialty foods and beverages were in trouble.
That has not been the case for New Seasons Market. The credit crisis forced the company to delay the construction of its 10th store, on Hawthorne Boulevard in Southeast Portland, but CEO Brian Rohter says: “We’re having our best year ever … We made it through this entire mess without cutting one person’s hours or eliminating a single job. We held onto our health insurance, we held onto all of our benefits. And that feels pretty good in a year like this.”
Having survived the worst of it, the Portland-based company is poised to resume growing in 2010 by adding 150 jobs at its planned 17,000-square-foot Hawthorne store, to be built by R&H Construction of Portland. If that seems like an awful lot of jobs for one new food store, it is. New Seasons has pursued a strategy of hiring robustly from day one, to minimize delays at the deli counter and the checkout line while building store ambience and customer loyalty. Given the business’ steady growth through good times and bad, it appears to be working.
Rohter says the new movement towardsfrugality did not hurt the business as much as some predicted because New Seasons was able to lock down low prices for its purchases and compete on price for basic food items even as it continued to offer the organic and gourmet items for which it is known. The company has even found a profitable way to compete with itself, offering New Seasons Market milk for just $1.99 a gallon as well as its Pacific Village brand organic milk for $2.99 a half gallon. Whichever product sells, New Seasons gets the money. The company has also started selling New Seasons branded coffee and cheeses.
As a company created partly in resistance to the corporate takeover of Portland’s super-popular Nature’s chain — which was bought first by Wild Oats and then by Whole Foods — New Seasons has proved adept at tapping into the Portland foodie scene. The company has also developed into a significant buyer of local meat, seafood and produce, and a generous supporter of the thriving farmers market scene, boosting the fortunes of Full Sail Brewery, Moonstruck Chocolate, Rogue Creamery, Umpqua Valley Lamb and many other food producers.
Even as the economy collapsed, Oregonians continued to pack farmers markets and specialty stores, although they didn’t spend as much as they would have in a normal year. Rohter says organics with a price differential of 15% or less continued to sell but once the difference got up to 20% or higher sales fell off. Still, even as customers spent less per visit than in the past, they offset that by shopping in greater numbers. That bodes well for the future of both New Seasons and the broader movement it represents.
The one sluggish area is Internet sales. “The only explanation I can think of is that we do too good of a job in the stores,” says Rohter. “People like to come into our stores in person.”
There could be worse problems to have than that.
TriQuint CEO Ralph Quinsey (far left) added 100 jobs in Hillsboro in 2008 and expects continued growth due to a steady string of military contracts and booming demand for smart phones.
PHOTOS BY LEAH NASH
Niche: radio frequency technology
Oregon jobs: 800
It would be difficult to find two Oregon executives more dissimilar in demeanor than Ziba’s Sohrab Vossoughi and Ralph Quinsey, the soft-spoken CEO of TriQuint Semiconductor. While Vosoughi clearly delights in following his muse wherever it may lead him, Quinsey is as disciplined and technical in his approach to being interviewed as he is in running a growing technology company.
Hillsboro-based TriQuint spun off from Tektronix in 1985 and rode the technology wave of the 1990s until that wave crashed at the turn of the century. When Quinsey took over in 2002 the company was teetering on the edge of irrelevancy. It had missed out on a major technological advance in its radio frequency business (the shift from components to modules) and needed to make a fast transition or get left behind.
“Filters were a big part of our business, and when Qualcomm completed their conversion to a direct conversion radio, they completely eliminated that market,” says Quinsey. “We were staring at a declining pipeline of new opportunities.”
Rather than radically shrinking the company, Quinsey and TriQuint focused on embracing the new technology and finding new applications in military and commercial markets. In 2002, new products made up only about 17% of TriQuint’s revenue. Today that figure is more than 50%. In spite of a recent drop in its stock price due to missing Wall Street’s quarterly expectations, TriQuint has recovered powerfully over the long term and remained profitable throughout the worst of the recession, adding more than 100 jobs in Hillsboro during 2008 and recruiting for several dozen positions going into 2009.
The key to that counter-cyclical success has been twofold. First, TriQuint has landed a steady string of defense contracts to assist the military with communications and surveillance, most recently winning a $16.2 million defense contract as part of its Nitride Electronic Next-Generation Technology (NEXT) program. Second, the market for smart phones has exploded, and while Quinsey won’t discuss his company’s collaboration with Apple on the iPhone, he is quick to praise the visionary product that has changed the industry.
But not even the iPhone can guarantee TriQuint an easy path. After third-quarter profits failed to meet analysts’ expectations and Quinsey lowered his outlook for the fourth quarter, TriQuint’s stock fell sharply in October. Quinsey says the business remains cash strong and in a solid strategic position. “Our military business is a technology incubator for us,” he says. “We get direct investment from the military to do fundamental R&D. It may take five, 10 or 15 years for those technologies to develop into products, but there will always be a next generation of products.”
That also applies to the booming civilian market for wireless communication: “It was always a joke in the industry that 3G was just around the corner for 20 years,” says Quinsey. “Well, it’s finally here in a big way. Eventually there will be a 5G and a 6G. And we’re going to be a part of it.”
Putting his money where his mouth is, Quinsey responded to the drop in TriQuint’s stock price by purchasing 3,500 shares on Oct. 23.
Niche: advanced wound care
Oregon employees: 80
Few will deny the value of a technology that saves the lives of severely wounded American soldiers in Afghanistan and Iraq. But while HemCon began as a collaboration with the U.S. military in 2001, CEO John Morgan expects to earn more through commercial markets than defense contracts for the first time in 2010.
That’s because HemCon’s proprietary technology, which capitalizes on the healing and anti-bacterial properties of a biopolymer refined from shrimp shells, has a broad variety of potential uses in hospitals and research centers as well as on the battlefield. “Virtually all of the products that we develop in conjunction with the military are geared to have a commercial application as well,” says Morgan. Examples range from HemCon bandages, patches and dental dressings, to phase one clinical trials funded by the military to develop a freeze-dried plasma product and delivery system for resuscitating severely injured soldiers and civilian trauma patients.
HemCon’s potential derives from chitosan, which has hemostatic and antimicrobial properties and is both biodegradable and bioabsorbable. HemCon dental dressings do not need to be removed after surgery, for example, because they simply dissolve in saliva over the course of several days. HemCon patches not only control bleeding during invasive clinical procedures, they also protect the patient from microorganisms.
HemCon’s success so far has come from proving itself on the battleground, essentially replacing the battlefield tourniquet with an easily applied bandage guaranteed to stop the bleeding. Its products have received wide credit for saving lives overseas, and the Army named the HemCon bandage one of the “top 10 greatest inventions” of 2005. But the next stage of development for the company brings a whole new challenge. Building HemCon from a military contractor with a few commercial products into a thriving biotech business will require new expertise. Morgan says the company plans to bolster its sales and marketing staff to capitalize on its entry into commercial markets.
Oregon’s biotech cluster will never be mistaken for California’s or Massachusetts’, but it does have potential. Several young companies such as Agere Pharmaceutical (one of a half dozen spin-offs from Bend Research), DesignMedix and Vesticon have compelling upsides, and while Genentech’s Hillsboro property is more of a warehouse than a research facility presently, the San Francisco biotech powerhouse has room to expand in Oregon should it decide to.
Morgan says he is always looking for “highly educated and motivated” researchers to add to its R&D team in Portland. And while he won’t share average salary figures, he does note that medical research positions pay 30% higher than the average Oregon job.
Niche: solar panels
Oregon employees: 550
Germany’s fastest-growing public company is quickly becoming a major employer in Hillsboro. In October 2008, SolarWorld had 360 Oregon jobs. By October 2009 that number had grown to 550. Head count is expected to double again within a few years.
“We will have 1,000 jobs by 2011,” says public affairs manager Ben Santarris. “That’s our commitment.”
“Anybody you need to run a company, we need,” says Santarris. “Accounting, HR, cost control and finance, maintenance and engineering, production managers, and on and on … We have new employee orientation every Monday.”
SolarWorld followed the subsidies to Oregon, receiving a state Business Energy Tax Credit of $20 million to build the largest solar panel manufacturing plant in the United States. With its recently completed expansion into module assembly lines, the company now has the capacity to perform every step of the solar manufacturing process in Hillsboro, from refining the silicon to packaging solar panels for shipment.
Falling oil prices and a glut of new competitors have weakened the price for solar panels over the past year, but SolarWorld is in a good position because it is cash strong, vertically integrated and well established in Germany, the world’s strongest market for photovoltaic panels. The price for solar panels is expected to fluctuate wildly in the near term, but there is little doubt about solar’s vast potential over the long haul, especially if high-volume production can bring down prices. The same holds true for wind power.
A growing world market for renewable energy and generous state subsidies have lured major companies from Japan, Denmark, Spain and South Korea to invest and hire in Oregon. Sanyo has opened a solar manufacturing plant in Salem and Uni-chem is planning to do the same in Eugene. The global wind powerhouses Vestas and Iberdrola Renewables have established North American headquarters in Portland. And more large renewable energy companies are being recruited. If concerns over global warming propel the market for renewable energy as many analysts believe they will, money will continue to flow into Oregon and jobs will be created.
At least one measure of the outlook for renewables, the NASDAQ Clean Energy Index, developed by Portland-based Clean Edge research, is predicting that will happen. The index increased by 37.5% over the first three quarters of 2009. That’s good news for SolarWorld and the other companies scrambling to ride the long-building wave toward a greener future.
Tripwire COO Dan Schoenbaum
PHOTO BY ANTHONY PIDGEON
These nine powerhouses are good bets to add rather than subtract jobs in the year ahead.
JIVE SOFTWARE had a huge October, raising $12 million from Sequoia Capital and releasing Jive Social Business Software 4.0. Few doubt the company’s potential with the social media explosion; whether it will remain in Portland or shift to the Silicon Valley remains to be seen.
OREGON IRON WORKS is leading the shift from blue-collar jobs to green-collar jobs with its timely United Streetcar spin-off.
SLAYDEN CONSTRUCTION in Stayton keeps winning public works contracts, and the outlook is bright in that sector as stimulus dollars work their way through the system.
SCHNITZER STEEL is back in the black after a tumultuous year in steel and scrap. Its cash position is strong and the outlook for its business of exporting scrap metal to Asia is solid as China leads the way to recovery.
STANCORP resisted the temptation to experiment with risky financial and insurance products, and as a result downtown Portland’s largest employer has held steady during the worst of the recession. The firm employs 2,500 in Portland and is always looking for top-notch actuaries.
TRIPWIRE continues to assert itself as an IT leader with enormous growth potential, hiring engineers in Portland while gearing up for an IPO.
US BANK passed the stress tests without a hitch and is hunting down strategic acquisitions in a weakened sector. No longer headquartered in Oregon, it remains a crucial regional employer and lender, with more than 100 open positions statewide.
WIEDEN+KENNEDY’S Levi’s campaign generated even more buzz than usual, starring Walt Whitman singing the praises of denim. Portland’s top ad agency has been outsmarting Madison Avenue for decades, and there’s no reason to believe it will stop now.