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Our Journey to Becoming a Billion-Dollar Market Cap Company

Our Journey to Becoming a Billion-Dollar Market Cap Company Image Credit: marchmeena/BigStockPhoto.com

Before 2000, I helped three different companies grow from startup to public status over 15 years. In the 1980s, we took one company from $6 million to $60 million; the next went from $8 million to $80 million in under four years. In the late 1990s, the third company went from $4 million to $40 million. 

By the time I came on as Chief Operating Officer for my next company in 2000, the dot-com craze was blowing up the market. Growth exploded, but it was an artificial environment that burst with the dot-com crash in 2001. Despite this and many other hurdles to come, over the last almost 20 years, this company has gone through three name changes and from less than 80 to nearly 800 people. It is now forecast to hit over $200 million in annual revenue with a market cap of nearly $1 billion - and we’re still growing. Our journey wasn’t easy, but we found success through lessons, challenges and advice along the way.

The road to success is bumpy

After the dot-com bubble burst, nearly 90% of the telecom market went under. The company I had just joined went from rapid growth on top of decades as a profitable business to suddenly facing bankruptcy. Then in 2003, a parent company bought and combined our organization with another to form a new division. They had an idea but no product, and they invested nothing in our division — which had a product to sell. By 2007, they still had no product and were running out of money, so the painful decision was made to discontinue the operations of the parent company and its functions. But with that decision came the opportunity to restructure our division as a new and exciting startup. In 2008, we became Clearfield. 

Our people had suffered almost a decade of pink slips by this point. In our transition into a division of the parent company, I had to let many people go and wanted to avoid doing that ever again, so I kept costs tight. However, as CEO of the company, I proposed a new compensation structure heavily based on performance. I told the board that the first million would go to the bottom line, but employees would get 50% of the remaining profits as an incentive bonus. Since the company had never been profitable, the board agreed, but we had advantages. We were trading at $0.98 with a market cap of $10 million, about $4 million in cash and no debt. Our biggest asset was $36 million worth of net operating losses from the parent company — nothing was holding us back. We made almost $2 million that first year and distributed approximately $500,000 as employee bonuses, proving we could walk the walk and drive team excitement. 

Bumps are lessons to be learned

The road to success may be bumpy, but it only leads to failure if we don’t learn from those bumps and grow. Our journey taught me to:

1. Listen

Our first established value as a new company was to champion our customers and deliver products that solved their problems. Coming from a rural market, I had listened to rural people's concerns all my life and understood how they made decisions. Instead of selling them a product, we were selling them improved cash flows, reduced capital and operating expenditures and growth. We provided a better value proposition than our competitors by listening to what our customers needed, and our approach was getting attention. We went from a small unknown startup to becoming the supplier for the fiber rollout of a multinational technology company.

2. Collaborate

Collaboration was crucial to succeed in a market alongside behemoths with billion-dollar market caps. All of our focus had to be on the external markets and serving our customers, which meant any internal conflicts would cause us to implode — we didn’t have the resources to handle it. We built our sales and operational infrastructure to support the value proposition we offered our customers to enable the lifestyle that better broadband provides. Still, everyone on the team needed to adhere to that proposition for it to succeed. Only through collaboration could we deliver that promise.

3. Celebrate

It was crucial to employee morale and the growth of the business to celebrate victories along the way. Once a year, our sales team comes in for training and planning, usually during the coldest time to be in Minnesota. After taking on our first major client, we were still relatively small at $35 million, but our next growth goal was $42 million, or 20%. I told the salespeople we would be able to meet someplace warm when we reached $50 million. That year, we hit $53 million and grew 40%. But it was more than sales alone that got us there — engineering and development came out with the right product, operations successfully shipped it and the accountants counted all the beans. So we took not just the sales team but the entire company on a cruise to the Caribbean. It was a defining moment for our company that people still remember to this day. 

It doesn't happen overnight

It may not always be possible to predict the bumps as they come, but taking actions in areas that build team resilience sooner than later can help get you through them. Celebrate successes right away. The earlier employees feel that boost of excitement, the sooner the company benefits from that energy. To start the shift toward profitability, we bought a bell to ring any time we got a $10,000 order, and when we started hitting that number, the celebration literally rang through the office.

No matter how much we plan, there will always be unexpected circumstances to throw us off course. Drive ahead with a clear direction, but be prepared to pivot because there will be potholes. Remember the road to success is long — it took our company 17 years to get to this point. Prepare for a journey rather than overnight success. Dream big, set goals and know that you can achieve them with persistence and the help of those you bring with you.

Author

Cheri Beranek is the CEO of Clearfield and a 2021 Minnesota Business Hall of Fame inductee. Under her leadership, Clearfield has grown from a concept to a market cap of more than $500 million providing optical-fiber management and connectivity solutions across North America.

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