| Cannon Technologies: Test of Time |
| Energy Executive Spotlight | |||
| Written by Mario Medina | |||
| Thursday, 01 May 2008 | |||
 Ed and Joel Cannon watched flashier companies come and go as they built their rock-solid, customer-focused business.
While that approach may seem a bit on the basic side, the Minneapolis-based energy solutions company has watched countless numbers of flashier, so-called sophisticated competitors fall by the wayside during its 21-year history. All the while, Cannon has charged forward with at least 25% annual revenue growth, a steadily increasing palette of cutting-edge products, a hefty customer base of nearly 400 companies in an industry that has a fairly limited pool of prospects—and an unflinching focus on the fundamentals of business success. “It’s about selling great product, having great people, and looking out for the bottom line,” Ed said. “We built this company to stand the test of time, like buildings in Europe that last 500 years. We’ve had a passion for the industry and what we can do in it—and we’ve made money.” Buoyed by sales of its centerpiece offering (Yukon Advanced Energy Services software, a platform for reading meters remotely, controlling peak load, and managing power), Cannon racked up sales of $51 million in 2006, surged even higher last year with revenue of $70 million, and is on pace to hit $90 million in 2008. “We like to under-promise and over-deliver, and we live by that,” Ed said. “A lot of companies see a hot market and want to do an IPO next week, and they just don’t have the foundation. They’ve got an idea or a product, but they can’t back it up.”  Ed and Joel Cannon, co-founders “Electricity was deregulating, and companies were coming out of the woodwork with sophisticated investors and slick management teams who had a different way of looking at the world than we did,” said company co-founder Joel Cannon, Ed’s younger brother. “They were getting venture capital and going public. Ed and I looked at each other and said, ‘Do they know something we don’t?’ But we continued to grow through the collapse of that, while those folks fell by the wayside.” Profits trump projections is another business principle that seems painfully evident, but one that many of Cannon’s competitors have failed to heed. “Ed has always had a fundamental discipline as a businessman, which he taught me and the company: You make more than you spend every month,” Joel said. “You don’t go get a pile of venture capital and lose money and say you’ll make it up later.” A changing current The company’s spendthrift ways stem largely from its bootstrap beginnings in 1987, when Ed, then a 13-year veteran at Westinghouse, recognized that computers heralded a sea change that called for systems integration, not standalone components. However, his prescient predictions were met with skepticism by his corporate peers. “When Ed proposed putting control software on a PC, some said it was a fad,” Joel said. Undaunted, Ed struck out on his own, recruiting Joel and two other recent college graduates, and pursuing municipalities, energy co-ops and other progressive-minded potential customers. “I had three guys in their early 20s, and everyone looked at me like, ‘You and what army?’” Ed said. “We didn’t have any outside funding, so we watched our expenses closely and tried to be innovative and creative.” Also driving Cannon’s careful monitoring of cash flow was the need to invest heavily and steadily in R&D to stay at the forefront of technology, as well as the painfully slow sales cycle of several years in a relatively staid, tight-knit industry with high barriers to entry. “It was hard to get taken seriously at first, because we were competing with household-name vendors, so we had to improvise,” Joel said. “After we landed a major automation project in 1991, we moved to the next level, where we could compete for multimillion-dollar projects. The companies who failed around us tried to do too much too soon. We were successful because we took a single customer and built around that.” Within a decade, the company had begun offering server-based systems, expanded beyond just making software into hardware design and manufacturing, and forged rock-solid relationships with customers, who were able to reduce peak demand by 10% by controlling loads. “All of the attendant nightmares that come with growth have occurred, but you just do your absolute best to make the best product you can. You wrap yourself around the customers and let them know that no matter what, you’re going to take care of them,” Joel said. “When you get a reputation for being the sort of company that does that, people have lot of confidence buying from you.” Ed and Joel’s keen eye for engineering and sales talent propelled growth even further, as did their all-for-one work ethic—an ethos shared by its 150-plus employees today. “We’re a check-your-ego-at-the-door kind of company,” Ed said. “The person closest to the broom closet is the one who sweeps. That’s our mentality.” The company’s high-flying success eventually attracted the attention of publicly traded Cooper Industries, which acquired Cannon in 2006 from Cannon and private-equity fund GFI Energy Ventures. “We do software and communications well, and they’re a dominant force in substation infrastructure and distribution equipment,” Ed said. “Going forward, it’s a couple of strong forces put together that complement each other very well.” While Cannon operates as part of Cooper Power Systems, a subsidiary of Cooper Industries, Ed and Joel continue to lead the company they started more than two decades ago—guided by the same core principles that drove their success. “When your name’s on the door, you know who gets the phone call when something’s wrong,” Joel said. “The fewer of those calls we have, the better we sleep. It’s simple motivation.” Mario Medina is a Dallas-based journalist specializing in business and technology. |
|||
| < Previous Story | Next Story > |
|---|
© 2008 American Executive - RedCoat Publishing. All rights reserved.
American Executive is a RedCoat Publishing publication.
American Executive is a RedCoat Publishing publication.
