Case Studies
MINDSCAPE
You know you’ve hit the mark with a new product
when, soon after launching it, someone knocks on
your door offering to buy the entire company. That
was the story for Wellington tech firm Mindscape
when in early 2013 it released Raygun, a Software
As Service (SaaS) product that helps software
developers diagnose and fix errors and crashes.
“From the beginning, the interest and demand for
Raygun was substantially higher than anything
we’d put out before,” says CEO John-Daniel
Trask, who founded Mindscape in 2007 with
Jeremy Boyd to build software tools for software
developers.
In fact, Raygun was well named, blasting a
smoking hole through their business expectations.
It’s used by 15,000 developers and climbing, earns
ten times the revenue of all other Mindscape
products combined, and has fast-tracked the
company’s development, with 15 per cent monthon-month growth for the last six months.
Why so popular? Trask compares Raygun
to an Apple product – it’s simple, but does
something quite sophisticated. “We like to think
of it as building a digital nervous system for our
customers’ software, so they can see what’s
working, what’s not, what they can improve, what
parts people really love working with, and so
on. Let’s be honest, software developers are an
expensive resource, and if they can fix something
in an hour rather than a week, then that’s good for
efficiency.”
Trask and Boyd, who are both highly regarded
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NZ MID-MARKET REPORT
developers on the Wellington tech scene,
bootstrapped Mindscape through the early years.
However, that acquisition offer in 2013 lit a fire
under them, and last year they raised $1.4 million
in a friends-and-family capital round to help the
company “go a bit faster”, as Trask puts it.
They recently opened a US subsidiary, Raygun Inc,
and are looking to hire 11 staff stateside to focus
entirely on sales and marketing. “More than 90 per
cent of our revenue is from exports, and most of
that is into the United States, so it makes sense to
establish our sales and marketing over there,” he
remarks.
The capital
raising exercise
also financed
a boost in R&D
spend last year
– in line with a
trend among
Wellington
Mid-Market
companies noted
in the 2015 GE Capital Mid-Market report. Trask
says that Mindscape has been supported by
Callaghan Innovation in a project to diversify the
Raygun product.
No standing still, then? “No, but that’s what I love
about the tech industry. I like to think we’re trying
to make everyone’s software better, not just our
own, and that’s a pretty big challenge.”
Case Study 1
Case Studies
BAY
RADIOLOGY
You need a strong business plan and nerves of
steels to invest in expensive services during an
economic downturn . . . thankfully, Bay Radiology’s
executive team had both when they made the
decision to continue with large scale investment
into buildings and equipment at the start of the
GFC.
“We could use the same pieces of equipment for 20
years, they are certainly robust enough to survive
that long, but that’s not what we are in the market
to do,” says General Manager Steve Harris.
Better and faster diagnosis drives innovation and
the continual investment in plant, he says. “This
means we are constantly upgrading equipment well
before it needs to be replaced.”
“At the start of global financial crisis we had
committed to significant investment in buildings
and plant, and we continued with that despite the
slowdown. The good news is that some of that pain
is now justified as we are finding it much easier
to maintain capacity expectations than we would
have if we hadn’t made that investment.”
Tauranga’s Bay Radiology has succeeded by
concentrating on its region and being clever about
use of resources. Since launching in 1988, it has
grown to four sites offering a comprehensive range
of services and a further four satellite sites.
“We are innovative in our approach to business
models,” says Harris, citing joint ventures with other
radiology practices and the public sector as one
way in which Bay Radiology has countered the
challenge of delivering healthcare in relatively small,
and sometimes isolated communities. “By sharing
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NZ MID-MARKET REPORT
resources, equipment and staff we can capture a
share of a wider market that we otherwise wouldn’t
necessarily be able to operate in. And we do a lot
of work for the public sector under contract, which
means we’re not competing with them and the
assets are employed efficiently.”
Like many Mid-Market businesses strong leadership
and engaged, talented staff are crucial to the
success of meeting targets and delivering on
client and contractual expectations, says Harris.
Though this is not always easy – GE Mid-Market
Report discovered half of all Mid-Market firms are
expecting to increase staffing levels, making the
search for talented employees tough.
“We have needed to grow personnel capacity in
order to meet this new demand and to do that we
are competing in a global market for highly skilled
staff.
“We are coming up against northern hemisphere
salaries as well as Australian salaries, so we have to
do a good job to attract
them to Tauranga.”
Once signed on with
the company, Bay
Radiology works hard to
retain staff. They have a
strong leadership team
with many of the same
people in key roles for a
number of years, says
Harris.
“This has been a
grounding influence on
the business throughout
those tougher times and
now as we look to grow.”
Case Study 2
Case Studies
AMURI
HELICOPTERS
You could call Tony Michelle a survivor. When the
North Canterbury chopper pilot co-founded Amuri
Helicopters in 1989 there were 114 operators
licensed to do agriculture work; today, barely more
than a dozen of those original companies are still
in action. The key to longevity in the notoriously
cut-throat helicopter business? Adaptation and
diversification. Over the years, the Hanmerbased three-chopper operation has minimised its
exposure to the fortunes of its farming clients by
taking on more tourism and corporate work.
In 2014, for example, with Canterbury in the
grip of a drought and farmer returns suffering,
Amuri Helicopters had “a pretty good year”, says
Michelle. “Our corporate work increased, so that’s
proved to be an excellent buffer.”
It’s been a hard-earned wisdom. During the rural
downturn of the late 1990s, the company had to
downsize due, in part, to farmers cutting spending
on aerial fertiliser and spraying operations.
Farm gate prices eventually improved, but in the
meantime Michelle had moved the base from
Waikari to Hanmer Springs and found reliable
repeat business flying fishermen and deer hunters
into the North Canterbury wilderness.
Today, a large portion of Amuri Helicopters’ work
is performed for three large ‘corporate’ clients,
with two contracting it for aerial aquatic weed
spraying in the Waikato and throughout the South
Island.
The aquatic weed spraying business is another
buffer, a protection of sorts against predatory
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NZ MID-MARKET REPORT
pricing and other anti-competitive practices that
persist in the industry, according to Michelle.
“It’s something we’ve specialised in that other
operators don’t do – again, it minimises our
exposure.”
It’s a bigger challenge, however, to survive in
the face of increasing regulatory pressure.
Compliance is the company’s third largest cost,
after repairs and maintenance, and salaries.
Dealing with regulation is a not uncommon
complaint from kiwi companies, according to
the 2015 GE Capital Mid-Market Report. “It’s an
increasing feast, really, flight compliance, health
and safety and environmental compliance,” says
Tony. “We have seven fulltime equivalent staff, and
I consider that one-and-a-half of those fulltime
positions are just about dealing with compliance.”
Client expectation is partly responsible. But
Michelle, who spent three years as chair of the
New Zealand Agriculture Aviation Association,
wants to see a shift to risk-based rather than
prescriptive environmental regulations. “We want
consistent rules, too. We work in the Waikato,
Canterbury, West Coast, Nelson, Marlborough,
Otago and Southland, and every region has
different rules around spraying and fertilising.”
He’s hopeful of progress. And farmer returns will
rebound. But there’s a looming challenge that
might prove harder for his industry to stave off:
the entry of drones to agriculture spraying. “These
things will become a reality,” he predicts.
Case Study 3