Making A Blind Bit Of Difference

From the Deloitte/Unlimited Fast 50 in the November 2001 edition of Unlimited magazine, with the permission of IDG Communications Ltd. Article written by Fiona Rotherham.

It's not hard to see why Pulse Data is considering a public listing in the next couple of years. Growth rates for the Christchurch developer of electronic aids for the blind and visually impaired averaged nearly 43% in the past three years. It claims to be making good profits and the outlook is just as promising.

With winning the eye of the world's richest man last year - that's right, Microsoft's Bill Gates - has come the sort of publicity small companies dream of. The company's latest product, BrailleNote, is a talking computer for the blind with a killer application that can use Microsoft's Windows and email Braille documents to other users in standard form. "We got a photo of BrailleNote in the New York Times when Microsoft put out a press release mentioning it, and coverage from all major newspapers and magazines around the world that we couldn't hope to tap into on our own," says managing director Dr Russell Smith. The Kiwi company signed a deal with Microsoft late last year to develop further software to allow BrailleNote users to access the Microsoft electronic book programme. The book reader, due for release in the first quarter of 2002, will allow blind people to download books the day they are published and read them instantly in Braille.

It's all heady stuff for the company that evolved from a 1988 management buyout (MBO) from parent, Wormald International. Smith and seven partners struggled to raise the $700,000 or so capital needed for the MBO, when the company was still not making any money. But they saw the international sales network, built up at great cost, was gathering momentum. Early cash flow hassles were resolved by setting up two divisions (since on-sold) importing medical instruments and hearing aids.

Smith says the company could never have come into existence in the current environment without the export incentives that helped it survive as a start-up. From the outset the company invested heavily in research and development - currently 8% of turnover. Being the technology leader in its field has paid off. All of the major companies in the industry have at some stage bought Pulse Data's technology and componentry to put in their products.

"Some people think it's a crazy idea because you're helping the opposition, but it is very lucrative. It also stops the opposition developing the expertise themselves so they're always a cycle behind you." As an R&D company there is a competitive advantage to being head-quartered in Christchurch - Smith reckons the company gets around three times the output per dollar it would if it were based in the US or Europe. Most of the savings comes from the lower wages paid here.

The biggest challenge in recent times has been strengthening its marketing network worldwide. Pulse Data recently acquired two North American marketing companies to gain greater security of supply into its biggest market.

Staff numbers have gone from five in 1988, to 130 worldwide. Revenue has gone from nothing to $30 million last year. Sales are forecast to be $50 million in the next financial year. If achieved, that growth will lift the company's size to among the top in the industry and give it access to customers who previously wouldn't deal with it because it was judged too small.

Smith reckons the company can continue its rapid growth because the low-vision end of the market is so under-penetrated. "Even if we take never take any business off our competitors there is huge growth potential over the next 10 years because so many more people are living longer and outliving their eyeballs. And more and more are using computers."