Top marks for performance

Michael Carden's company Sonar6 has cracked the North American market. Photo / Michael Craig

Around a billion people worldwide have their performance reviewed every year, Sonar6 co-founder Michael Carden says.

That means the potential market for the Kiwi performance management software company's product is virtually unlimited, he says.

Sonar6 has been ranked number 22 in this year's Deloitte Fast 50 listing of the country's fastest growing businesses. It recorded an impressive 324 per cent growth over the past three years.

While other exporters have found the US market challenging at best since the global financial crisis, most of Sonar6's growth has came from North America, Carden says.

"Larger markets often take some time to crack but once you start to crack them they obviously produce much bigger rewards."

Although the software firm started doing research and development in 2004 it only commercialised its product four years ago. This is the first year it has been eligible to enter the Deloitte ranking (businesses must be three years old).

Not a bad effort for a first time entrant, given many firms which missed out were surprised to find that the entry level this year was a stunning 161 per cent growth.

Sonar6 exports 70 per cent of its production to a host of countries, including Bahrain, India, Panama, Honduras and the United Kingdom but, in many ways, it had to choose to focus on North America, Carden says.

The employee performance management market is well established there, with defined competitors and a customer base that understands the offering.

"There's nowhere near the educational element to the market that you'd find if you were trying to sell into Asia, say."

The competition is hot but that forces you to create a good business, he says. Your competitors also do their bit to educate and build the market.

While most of the company's 30 staff are based in Auckland it also has an office alongside its competitors in Silicon Valley.

With a tagline of "At last, performance reviews that don't suck", Sonar6 believes its performance management tool is useful for employees and managers. In comparison, many of its competitors come from a compliance background.

The firm's "sweetspot" is customers with 100 to 1000 staff. Kiwi firms know about small to medium enterprises, Carden says.

"It's helped us, having an understanding and focus on the mid-market."

Customers include large US pizza chain Papa Murphy's Pizza, the charity World Vision, and worldwide power generator company Aggreko.

One of Sonar6's backers is Trade Me founder Sam Morgan, who was behind possibly the most famous sale of a Kiwi startup.

While it can never be ruled out, a sale is not in the wind for Sonar6. There has been a lot of consolidation in the sector but it is not building a company to sell, Carden says.

Many Kiwi companies sell out too early and later regret it. "As a shareholder group, we're pretty focused on this idea of building a great big New Zealand business."

Sonar6's products are sold on a subscription basis and as long as customers keep renewing and it keeps making new sales its revenue will continue in the right direction, he says.

Its lab and marketing functions will remain in New Zealand.

The software business suits this country because it doesn't involve physical exports, meaning distance from markets is not a major issue. "None of this is easy but that's the difference between success and failure."

Do you have any SME issues you would like us to investigate? If so, contact maria.slade@hos.co.nz