2015 Winner: Valorem Takes a 'First-in' Approach

• By Gladys Rama
• October 14, 2015

Risk is part and parcel of Valorem Consulting's DNA. The co-founders of the Kansas City-based Microsoft consulting partner, Justin Jackson and Domnick Parretta, had a vision of a "first-in" company -- that is, a company that's first in adopting and supporting new technology. Case in point: Valorem started in 2009 as a firm focused on Microsoft cloud technologies, at a time when cloud computing was still a largely untested business model and Microsoft Azure was still in the pre-release stages.

Valorem took a big risk betting its business on cloud, and the dividends have been significant. In the past six years, Valorem has grown from a two-person operation to a 130-person-and-growing company. In 2012, revenue grew by 73 percent year over year; in 2013, by 50 percent; and in 2014, by 65 percent. Parretta expects revenue to balloon by another 70 percent this year.

A big contributor to that growth is Valorem's willingess to embrace new technologies. In 2009, it was cloud; nowadays, it's the Internet of Things and "mixed reality" technologies like the Microsoft HoloLens. Parretta acknowledges that there's inherent risk in Valorem's first-in philosophy. "The risk there is where we spend cycles ramping up on the wrong trend," he says. "I don't think we've had one of those big missteps, but I'm sure we will, at some point."

The key to avoiding those missteps so far has been discernment, and the ability to distill real-world applications from even the most bleeding-edge concepts. "We do it smartly. We don't just jump on everything. I think we try to look out for what are the mega trends, where is the messaging, where is the bubble coming," Parretta says. "And we don't do it for the sake of being trendy."

With HoloLens, for instance, Valorem is taking steps to assess how the technology's 3-D modeling capabilities can augment its own cloud offerings and solve business problems in the manufacturing and design industries. Parretta doesn't necessarily expect HoloLens to become a revenue stream for Valorem right away, at least outside of a handful of early adopters. The payoff is in the long-term, when the technology has become more mainstream. Right now, the focus is on "building the chops" among Valorem's employees to work with mixed-reality technologies. "That way, six years from now [when it becomes mainstream], we've already established ourselves."

For Valorem, which offers services based solely on Microsoft products, this first-in approach also has the benefit of making it easier for the company to get Microsoft's attention. "It's about getting in early and building rapport and relationships before the herd comes charging in, and I'm a little guy at the table versus the only guy at the table," Parretta says. This relationship with Microsoft has been critical to Valorem's growth, according to Parretta.

Another factor in that growth has been the fact that many of Valorem's stickiest customers have also seen significant revenue growth of their own. Some of Valorem's projects that were initially worth between $20,000 and $30,000 are now worth $500,000 to $1 million, according to Parretta. "We've done a good job of profiling and retaining good customers that will grow," he says. "We bet on the right type of projects with the right type of companies."

As Valorem's coffers have grown, so has its headcount. Since 2012, year-over-year employee growth has ranged between 45 percent and 67 percent. This has been fueled, in part, by Valorem's need to diversify its employees' skills to keep up with new technology. Mainly, though, it's a matter of logistics.

"Hiring isn't easy, but it's critical to our ability to sustain growth," says Parretta, who identifies recruitment as Valorem's top business hurdle of the past three years. "We spend almost all of our time on how to market, how to recruit, how to attract the best people. Because -- at least in this day and age -- we don't have a sales challenge. We can get customers, we can retain customers, customers want to do work with us. We have a challenge in hiring people fast enough."

The developer-to-job ratio in Kansas City is about 7-to-1, Parretta says. That makes attracting and retaining employees even more challenging. To bolster its recruitment efforts, Valorem has invested a lot in infusing its headquarters with the kinds of perks that a young workforce has come to expect. There are areas to park your cruiser bike, for example, or socialize over coffee or play ping pong.

"Culture is king here," Parretta says, noting that among today's crop of prospective employees, high salaries are not always enough. "Someone's always going to pay more. I think it's about culture and about purpose."

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