Seven Small Jewels, 2011: Kalypso

Kalypso

Bill Poson and George Young HQ: Beachwood, Ohio
Additional Offices: Boerne, Texas, Amsterdam, The Netherlands, Seoul, South Korea, Paris, Munich, Milan, Bangalore, India and Taipei, Taiwan
Billable Consultants: 95
2009 Revenue: $10.7M
2010 Revenue: $18.5M
Revenue Growth: 73%
2011 Revenue: $32M (projected)
Client Industries: Consumer Packaged Goods (Retail), High-Tech, Life Sciences, Manufacturing
Service Line: Strategy, IT

The idea for a brand new consulting firm can come about in all sorts of ways. But leave it to an innovation firm to have its roots at a retirement party. That’s where
Kalypso co-founders George Young and Bill Poston, then partners at Deloitte Consulting, were when they came up with the thought of launching their own firm.

At the time, the two were working on product development, product innovation and product life-cycle management, and the party—for a long-time mentor—served as a springboard.

“We liked the subject matter very much, but at a very large consulting firm it’s hard to focus on a niche like that because if you’re a successful partner at a firm like Deloitte they don’t want you selling $4 to $6 million engagements in product development and innovation,” Young says. “It’s not as appealing as a $120 million enterprise transformation project. What we wanted to do wasn’t what a firm like Deloitte was set up to deliver.”

So, in 2004, Young and Poston set out to create the “world’s premier innovation consulting firm,” they say. “We didn’t see anybody out there effectively blending innovation and strategy, who could combine management consulting with PLM technology implementation expertise,” Poston says. “Our primary focus and vision in the initial phase—and today—is to be exclusively focused on innovation product development and product lifecycle management, but to bring a comprehensive set of capabilities to help clients transform the way they innovate—everything a client might need to improve in order to deliver on a consistent basis.“

What they have built, in some ways, doesn’t really fit into the traditional consulting hierarchy. Young says the firm doesn’t have a true head-to-head competitor. Other firms, he says, may have a product development practice but don’t have the ability to consult on modeling and simulation and the implementation of PLM technology. And some firms can implement PLM technology, but they don’t have anyone that has headed a giant innovation transformation program. “We have an explosive focus on innovation, but then a comprehensive set of services directed only at innovation,” Young says. “No one else does that.”

Kalypso has also had explosive growth since the early days. After finishing the first year with 12 employees, Kalypso’s never looked back—growing at least 50 percent (and usually more) every year except 2009. That year, in one of the most challenging economies ever, the firm grew 35 percent. “In retrospect, I guess that’s pretty good considering the industry contracted in 2009,” Poston says. “At the time, it felt like the end of the world because we had grown accustomed to doubling the business every year.”

For most of 2009 the firm’s headcount remained flat at about 65, but then demand snapped back and the firm started hiring aggressively, including a small acquisition in the fall of 2010 that added about 20 people. By the end of this year, Kalypso expects to have 130 consultants and grow to $32 million in revenue—and that’s all organic, Poston says.

“Our strategy is to keep the pedal pressed to the floor,” Poston says. “I would expect us to be at 250 people and $80 million by the end of 2013.” At that point, he says, they’ll assess what the market can bear, but “I don’t see any reason why there wouldn’t be room for a firm providing our services to be 1,000 consultants.”
Coming off its best year to date, it’s easy to see how the two could envision that type of success.

“There have been some industries that have held back, such as retail and apparel, that are investing again. I think our performance reflects, in part, a resurgence of the economy. But most importantly, firms are now seeking us out,” Young says. “That didn’t used to happen, but it happens pretty regularly now.”

—Joe Kornik

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