Game Changers

As we march inexorably deeper into 2009, we seem to be walking through a minefield. Everywhere we go there is bad news. Virtually every major Washington institution has announced layoffs. And if they havent yet, theres a good chance they soon will. Stock prices keep sinking, and many companies now face the threat of bankruptcy. The gloom and doom are feeding on themselves and are in danger of becoming a self-fulfilling prophecy.

But the best business leaders in this region know that bear-market times call for bull-market thinking. By focusing on the right niche and offering products and services that can help customers increase efficiency, savvy entrepreneurs know that an economic crisis can be an opportunity to rewrite the business rules in their favor.

In these pages, youll find local companies that are not just surviving, they are thriving: Big Fish Games, flush with cash, is hiring and expanding market share in the booming casual games sector; Talyst, which makes software that can immediately reduce health care costs, keeps tapping new markets; Spokanes Signature Genomic Laboratories has raised the bar for genetic testing across the country; Revel Consulting has exploded by showing large organizations where they can cut the fat; and Ascentium has combined technology and marketing to keep growing even as the advertising market tanks.

As the shakeout of the weaker companies continues this year, expect to hear a lot more from these five companies that are helping to reshape the states business landscape. >>>>

With the business world wracked with worry over the recession of 2009, Jeremy Lewis, president and CEO of Seattles Big Fish Games, has been reading up about how to navigate his casual gaming company through difficult waters.

So who does he look to for advice? Warren Buffett? Bill Gates? Jack Welch?

Charlie Chaplin, Lewis says, holding up a biography about the silent movie star. In both good and bad times, he did the same thing: He made enjoyable, safe, mass-market entertainment at a great value. He was a true business leader for his times.

While Lewis does not compare his own success to that of the cinema icon, he does believe his rapidly growing gaming business is walking in the oversized footsteps of Chaplins Tramp.

Founded in 2002, Big Fish has seen remarkable growth, offering about 1,000 individual game titles that can be played online or downloaded to desktops or mobile phones for about $7 to $20 each. All downloads are also free for the first hour, allowing gamers to take each title for a trial run.

Lewis business model is not necessarily recession proof, he says, but it has highly defensive characteristics, such as a low price point, several free-to-play options and squeaky-clean entertainment for the whole family. Theres no reprehensible activity, no violence and no foul language, he says.

The gameswith names like Mystery Case Files, Serpent of Isis or Unwell Melare called casual because they tend to be fairly easy to learn, yet challenging, and can be played relatively quickly. Most are about investigating mysteries, going on adventures, solving puzzles or completing simple tasks against a clock. A recent report by market research company Parks Associates predicts that, by 2013, revenues in the casual gaming space will exceed $1 billion.

One of the more impressive feats by Big Fish during the current market downturn is the astonishing pace maintained by its 600 contract game developers located around the world: At least one new game is released daily. To our knowledge, Big Fish Games is the only company in the world that releases new IP content every day, Lewis says.

Last July, Big Fish moved out of its 23,000-square-foot office in Seattles Westlake Center to a roomy 60,000-square-foot space on the shore of Elliott Bay to accommodate an additional 178 workers it hired in 2008. Today, the company has a staff of 360 and, as of early March, had plans to hire at least 26 more. Thats in addition to the 600 developers, who work on long-term contracts with Big Fish, sharing revenues from the games.

After netting $85 million in revenue and growing by about 70 percent last year, Big Fish doesnt appear to be slowing down. This January, Lewis says the companys subscription base grew 111 percent faster than it did in September 2008, when the stock market crashed. He expects the companys growth trend to continue, although he wouldnt provide specifics.

At the beginning of 2009, Big Fish reached another important milestone in its meteoric rise. According to the website tracking site HitWise.com, in the first week of February, Big Fishs market share in the casual games market reached 12.96 percent, edging out longtime casual games leader Yahoo Games 12.19 percent. For the first time in history, Big Fish stood alone atop the fast-growing casual games space, with about 1.5 million game downloads per day from Bigfishgames.com.

Some say that luck played a big role in Big Fishs success, as the company managed to land a whopping $83.3 million in venture funding last September, just before the economic crisis put a deep freeze on the capital markets.

But Lewis also made some conscious decisions to brace his company for impact. Anticipating the problem of faltering ad dollars last year, he eliminated all paid advertising on the website and focused on the current subscription and download model. I tend to be pretty contrarian, Lewis says.

For 2009, the focus will be on launching two new casual interactive entertainment businesses later this year, including a massively multiplayer online offering.

In addition, the company will be focusing on international growth. The company has opened an office in Vancouver, B.C., and now releases games in five different languages. Approximately 52 percent of its revenue comes from outside North America.

Now that the target is on Big Fishs back as it leads in its casual gaming niche, Lewis says he is continuing to build Big Fishs reputation. Its one thing to grow, but its another thing to sustain that growth, he says. Our goal is to build the leading casual interactive company in the world, and I feel were on solid footing to do that. Randy Woods

2004 Revenues: $3.8 million

2008 Revenues: $85 million

2009 Prediction: About 70 percent growth

Vikas Kamran, CEO and co-founder of Revel Consulting, sometimes faces a tough sell when hes trying to drum up new clients. Consulting is something you cant touch, you cant feel, he says.

However, the results of his companys efforts practically sell themselves, especially these days, when every firm is scrapping for its last dollar. Revel saved one business $1.7 million over four years with a new bill-payment structure, for example, while significantly reducing delivery cycle times for several of its software developer clients.

As a result, Kirkland-based Revel has burst upon the consulting scene in the last five years, providing its business and information technology consulting services to some of the countrys top Fortune 500 firms, including Microsoft, Starbucks, Liberty Mutual, AT&T and Readers Digest Association.

From 2004 to 2007, Revels revenue soared by more than 3,000 percent, reaching $9.5 million. In 2008, with annual revenues of around $15 million, Revel reached No. 48 on the Inc. 500 list of fastest growing companies in the United States, and was No. 1 in the Seattle/Tacoma/Bellevue market.

Part of Revels success stems from brutal honesty regarding the bottom line. Revel develops a plan for clients to help them identify areas where they can drive down costs and understand where the fat is, Kamran says. This is going to be a year banked on operational efficiency. We want to show [clients] results within months, not years.

Kamran also attributes Revels popularity to something he calls the pure consulting model, which strips away much of the bureaucratic layers found in many of the Big Four consulting firms. Rather than just pointing to solutions, Revel will take over certain operational functions and provide daily guidance so the client can focus on product development and go-to-market strategies.

And were not charging a 30 to 40 percent premium for our name, Kamran says, in a swipe at the Deloittes and KPMGs of the consulting world. Thats the cool thingno one cares about that stuff anymore.

One segment of Revels business that has grown dramatically in recent months, Kamran says, is software-as-a-service (SaaS), a market that research firms IDC and Gartner expect to be worth at least $19 billion over the next few years. Revel has been helping several clients transform to the subscription-based SaaS model by integrating with Salesforce.coms cloud-computing platform and Microsofts online services.

Depending on the final details of this years economic stimulus package, Kamran says he sees more opportunities in the health-care arena as clients look to establish electronic health record systems. One example, he says, is Microsofts Amalga, a unified intelligence system that can help hospitals store and retrieve data in real time.

After a successful 2008, Kamran says 2009 should see growth of 10 to 15 percent. In recent months, Revel expanded its size by 25 percent to employ 100 people and also opened an office in the Bay Area. Later this year, Kamran expects to expand Revels services to the East Coast financial sectors.

Its going to be a phenomenal year, Kamran asserts. I dont see [the recession] as a problem. Its a good time to step back and recalibrate your business model. Companies have to realize that this is just the way the world is going to be. R.W.

2004 Revenues: $299,582

2008 Revenues: $15 million

2009 Prediction: 10 to 15 percent growth

Advertising agencies may be feeling the pinch, but Bellevue-based Ascentium doesnt seem to notice. The 8-year-old company, which bills itself as a digital marketing agency, actually saw a 60 percent increase in revenues in 2008, despite advertisers tightening belts.

Ascentiums skyrocketing sales$96 million in 2008 over $54 million in 2007may have something to do with the agencys nontraditional business model. In addition to advertising, the company designs websites, experiences and interactions for clients. It doesnt just stop at designing creative content and developing ways to get that message online, though. Ascentium also has a customer relationship management practice, a business intelligence practice and a collaboration offering. Meaning, not only might Ascentium develop an advertising campaign and a corresponding website for a client, it might also create a way to track the customers that campaign attracts.

We sell the marketing creative, but we also allow our customers to be able to measure the impact of these marketing efforts through our analytics, but then to tie them back into our CRM systems so that they can actually effectively drive sales through this, says Jim Bebe, president of Ascentium. We felt that gave us more stickiness with our customers. It also oftentimes helps to reduce their cost of implementing any marketing campaign.

That ability to apply technology to marketing problems is one of the most unique aspects of the Ascentium and what differentiates the company from its competitors. It may also have a lot to do with how the company has remained so profitable this year. Revenues for 2008 were up 60 percent over 2007 and though sales did decline between the third and fourth quartera reflection of the seasonality of Ascentiums business, not the economy, Romi Mahajan, Ascentiums chief marketing offcer saysthe company still had a record $20.5 million in fourth quarter sales.

This year, however, will likely be flat for Ascentium because of the economic downturn.

I guess were all pretty fond of saying flats the new up, says Bebe.

The companys unusual creative-plus-services bent to its business isnt, however, what Ascentium sees buoying it up during the current economic funk. Instead, Mahajan points to four fundamentals of the company, beginning with a desire to become deeply entrenched in its clients businesses.

We tend not to want to do superficial, surface-level projects with our clients because thats a very commodity[-oriented] business, and it doesnt actually instantiate you well in the customers future itself, says Mahajan.

The other core philosophies holding the company in good stead are a commitment to a culture where employees act as corporate emissaries, abandonment of the familiar agency retainer and a serious willingness to adopt risk.

That risk is inherent in the companys occasional practice to pay for results: If a campaign doesnt work due to agency errors or inability to produce, Ascentium holds the bag.

The retainer model, Mahajan says, is not a model that incents great risk taking or great creative treatment. Its not a model that has the customer in mind. It has your own business in mind, really. Its an accounting phenomenon.

Meanwhile, Ascentiumwhich, with 470 employees is the 27th largest online ad agency in the United Statesis deeply rooted in a very viral kind of culture. By enabling employees to act as evangelists, the firm gets new customer and employee referrals from rank-and-file employees, ones who seldom typically interface with a customer.

Boil it down and its clear Ascentium, in its evolution from technology consulting, has become focused on making itself indispensable to the customer, all while being willing to put its own best interest at stake to prove it can deliver. And perhaps risk is exactly what a successful company must embrace in this very risk-averse economy. Julie H. Case

2004 Revenues: $9.2 million

2008 Revenues: $96 million

2009 Prediction: Flat growth

Few in business like to say they have a crystal ball to predict the future. But for geneticist Lisa G. Shaffer, predicting the future is her businessat least at the chromosomal level.

Shaffers particular crystal ball is called microarray-based comparative genomic hybridization, or array CGH, a type of genetic test for infants and children. Shaffers company, Spokane-based Signature Genomic Laboratories, was first to market the test back in 2004, and is now considered the leader in identifying pediatric genetic abnormalities.

We look for things you cant see in a microscope, says Shaffer, who is president and CEO of Signature, as well as co-founder of the company in 2003. Viewing cell tissue with a microscope, she explains, is like looking at a city from a satellite viewlots of information, but not much surface detail.

If you want to find the fire hydrants, youve got to walk along the roads, Shaffer adds.

Thats where microarrays come in handy. While genetic testing, commonly known as karyotyping, has been around for decades, Signatures SignatureChip technology represents a true breakthrough in genetic analysis. In a laymans nutshell, array CGH can detect differences in DNA structure that are too minute for traditional karyotyping; these differences can help doctors diagnose mental and developmental disorders that may have been missed in previous tests. Most tests can provide results in just five to seven days.

If a child tests positive for a certain genetic disorder under the CGH method, doctors can be alerted to common health problems that may be associated with the disorder and can better prescribe future treatments. Also, the childs parents can get tested to determine whether they face an increased risk of passing on the disorder to other children they may have.

Being a pioneer in this growing market has paid off for Signature, which performed about 34,000 SignatureChip array CGH tests in the last five years. Revenues rose 1,766 percent to $13.4 million in 2007 from $719,000 in 2004. Last year, revenues jumped again to $18.4 million, and Inc. magazine placed Signature in the No. 5 spot on its national Top 100 Health Companies List.

While the company also offers in utero testing of embryos via its PrenatalChip, Shaffer says most of the companys future growth will continue to be in the post-natal SignatureChip tests. We created this microarray diagnostic market, she says. Now a number of other commercial labs are all switching over to it.

To date, 2009 is off to a good start, Shaffer says. Were already beating our budget for this year. We expect further growth by about 30 percent, and were still hiring. Signature has more than 90 employees and is still hiring. If the company sticks to budget, she adds, Signature should have a total of 130 employees by the end of the year.

This summer, Signature is planning on increasing its dominance over the microarray testing market by launching a new type of genetic array CGH test for adults. Although Shaffer could not provide details about this technology, she says that use of the test will most likely gain popularity in 2010.

Were hoping that health care is immune to market fluctuations, Shaffer says. As long as children are still being born, parents will keep checking for birth defects. R.W.

1) DNA is extracted from a patient sampleusually bloodand tagged green.

2) A control DNA sample is tagged red.

3) The two samples are placed on a glass slide where they compete to attach to special probes printed on the slide.

4) Once incubated, the process creates hybridized DNA on the glass slide.

5) A microarray scanner measures the color signals from the hybridized DNA. Yellow signals show that each portion of the red control DNA is matched by its green counterpart in the patient sample. A red or green signal means there is a discrepancy between the patient DNA and the control, suggesting a possible genetic disorder.

Signature Genomic Laboratories
www.signaturegenomics.com

2004 Revenues: $719,449

2008 Revenues: $18.4 million

2009 Prediction: 30 percent growth

In the eternal debate over health care reform, much is said about streamlining the insurance process or cutting drug costs. One nearly forgotten element of the discussion is the method by which the drugs are delivered to patients.

Bellevue-based Talyst, however, saw this often-overlooked link in the health care chain as a lucrative niche in dire need of automation. For the last seven years, the firm has developed software, called AutoPharm 3, and a series of hardware systems that store, dispense, identify and maintain proper temperature for drugs for hospital pharmacies.

Talysts software and services involve a barcode system that enables nurses to scan medications at a patients bedside and make sure the correct drug is being administered in the exactly prescribed dose. As drugs get delivered from the central pharmacy to the doctor, to the nurse, the patient, theres a lot of handing off going on, says Carla Corkern, Talysts CEO. Our goal is to create a safer pharmacy.

Talysts ability to reduce waste, increase security and cut down on improperly dispensed drugs has caught on in more than 300 hospitals across the country. In 2008, Talyst had revenues of $35 million, up more than ten times from 2004.

Consulting firm Deloitte named Talyst the second-fastest growing company in Washington state in 2008 and ranked it at No. 52 in the nation in terms of growth. Corkern notes that about $25 million of the firms $35 million in 2008 revenue came from new clients.

Traditionally, Talysts primary market has been so-called acute-care facilities, or hospitals that offer short-term treatment to patients with severe illnesses. Today, Corkern says Talyst holds about 44.5 percent of the acute-care market. But there is even more growth to be found in at least two other sectors: long-term care and correctional facilities. In 2007, Talyst launched its InSite remote dispensing system designed to serve those markets. So far, Talyst has sold about 20 InSite systems; Corkern predicts that about 100 systems will be in the field by the end of this year.

Currently, there are at least 15,000 American long-term care facilities, including nursing homes and senior housing developments, representing a $1.8-billion market. Thats about eight times the size of the acute-care market, Corkern says.

Corkern admits that the strength of the prison market took her by surprise. This is a market we didnt expect to explode like it did, she says. She adds the InSite systems help prevent diversions, the industrys polite euphemism for theft. In addition, prison health care is a single-payer system, so county governments are eager to see any kind of cost savings and return on investment, she says.

As for the economic downturn, Corkern remains optimistic, predicting a 20 percent growth in new business in 2009. Last year, Talyst secured $20 million in funding from troubled insurance giant AIG, of which Talyst has spent $8.5 million to date. Corkern expects to spend another $6 million this year, but does not foresee the need for more venture capital in the near future.

While others in the medical field are laying people off this year, Corkern says Talyst already went through its painful cuts, drawing down its workforce from 170 to 100 last year, mostly in the home-care and retail sectors. We got hammered in the blogs for doing it, she notes, but the restructuring in 2008 makes us look smarter today. R.W.

Talyst

2004 Revenues: $3.4 million

2008 Revenues: $35 million

2009 Prediction: 20 percent growth