The company titled its annual report for 2009 as a “Fantastic voyage” and having been at the press conference I can say the title is a big understatement on the story itself. The Switch is a 5 year old clean tech company building converters and generators for the wind energy industry. They have been in business for about 5 years and their first years (2005 and 2006) revenue wise were good – they made a few millions in turnover. In 2009 they turned over 96,5 million euros.
The story behind the company in terms of financials is a real wonder among Finnish startups and growth companies in general. In 2006 they had 22 employees and at the end of last year they had close to 200. As of today they have 227 and continue to grow. The success of the company is heavily based on the foundations or ideas the company was founded on.
In 2006 when they began rolling out to the market they realised there was a shortage of everything – the demand was huge for everything to do with wind energy. The Switch soon realised that they need to create a scalable business in terms of production networks where they could grow faster than was traditionally possible.
With the help of the networked production model as well as an innovative prototype process, they were able to reduce the time to market with generators and converters from 18 months to 12 months. The Switch does this in a cost effective manner as well. They are very strong in China, which is considered to be the most cost sensitive market in the world for wind turbines.
So how big exactly is the market and how big can The Switch grow? Very big is my guess. In 2008 the whole wind energy industry was considered to be 39 billion euros in size. General estimates are it grew by a third in 2009 making it well over 50 billion euros. Being able to chew out a 100 million turnover from this does not qualify as an attribute of a huge company, but it is however, a very impressive start to become one.
The attitudes of The Switch management were admirable at the press conference when a journalist asked when will they IPO. Jukka-Pekka Mäkinen, CEO, stated that financially they could have IPO’d sometime ago already but they do not consider themselves a large company and quite where they want to be yet. Their goal for 2012 is 250 million euros in revenue.
To look at this from another point of view, there isn’t really any reason for The Switch to go public just yet (if at all). They are profitable, their compounded annual growth rate is a little over 100% for the previous 4 years and there’s a lot of demand for their products in a time when they aren’t anymore strapped of cash that much. Dag Sandås, CFO, stated that in the previous years they had challenges every now and then to come up with the cash to keep growing – even though their basic business model showed it worked and their growth was tremendous.
The banks aren’t the only stakeholders unable to grasp the potential of The Switch. At the press conference, very few press members were present. To me it seemed that this was just another little company press conference eagerly looking for visibility. Stories like these are incredible motivators for the society as a whole – we seriously need more of these, as well as understanding for companies like The Switch in the media. If we continue to write about the problems of large corporations we grow blind to the new world order of growth companies and entrepreneurship that will drive the welfare of countries in the future.
The Switch is also organising a blogger event on the 29th of April at 3 pm Finnish time. More of that from The Switch later on.
Disclosure: The Switch is one of our consulting clients. While this post has not in any way been promoted or asked to be written by the company itself, we’re extremely happy to cover it and proud to be able to work with them.