Premier Technology gives birth to three startups

Sean Olson//January 25, 2012

Premier Technology gives birth to three startups

Sean Olson//January 25, 2012

A Premier Technology employee makes a weld in the company's Blackfoot facility. Several new products developed at Premier will be spun off into their own companies to be run by Premier founder Doug Sayer.

After building up Premier Technology Inc. to a 350-employee staple in southeastern Idaho, Doug Sayer is ready to start all over again.

Sayer is stepping down as CEO of Premier, the company he founded in 1996 with “$35,000 and a pickup,” to helm three spinoff companies with three very different products. While Sayer nurtures the new companies to life, he said the key is to make sure Premier doesn’t suffer.

“The number one commandment that I shared with everyone is ‘thou shalt not harm Premier Technology,'” Sayer said in an interview.

New CEO Mike Ryan, the former chief operating officer for Premier, said people shouldn’t notice a difference in the original company, which holds engineering, fabrication, research and drafting contracts for the nuclear and food industries, among others.

“I don’t see Premier itself, the core business of it, really changing that much,” Ryan said. “We do not want to interfere with or damage what we’ve already got.”

Sayer, on the other hand, will be looking at juggling three new companies handling mining equipment, material upgrades and software.

The first new venture, called Mine Performance Inc., will sell and install a giant shock absorber made for rope shovels often used in open pit mining operations, Sayer said. The product is ready and will be manufactured at Premier, he said.

Sayer expects the shock absorbers to start making money for the new company immediately.

“It’s a relatively quick payback,” he said.

The second is a company called Metallix that will contract with other companies to upgrade materials used in the nuclear industry, to meet regulatory and functionality requirements.

The side business could allow Sayer to contract with direct competitors of Premier, which manufactures equipment used in nuclear facilities.

The last company will sell software for nuclear industry business that tracks and manages the massive amount of regulatory compliance a company in the industry must keep up with. It has yet to be named.

Sayer said the software would keep the compliance work, which must all be backed up by paper, organized and streamlined, saving a company money. He said the software automatically gives a company credibility, because if they are using it they will already be in compliance with regulations.

“That’s how you get the $400 hammer and the $600 toilet seat, it’s all the paper that goes with it,” Sayer said.

Brian Greber, director of the Center for Business Research and Economic Development at Boise State, said it is often a good idea to split new ideas in a business into their own companies, especially if they are fundamentally different than the existing company.

“When you’ve got a good idea that might call for very different cultures and competencies, it is often a much sounder business strategy to pull the operating unit totally apart so you can build one that has the focus, culture, metrics and customer dynamics uniquely suited for that property line,” Greber said.

If a company like premier were to expand its focus too far outside its original mission, Greber said, it often sacrifices efficiency and confidence from its customers in the marketplace.

“The business model in the U.S. favors the very focused, mission-based business,” he said.

Virginia Aulin, human resources and corporate affairs vice president at Boise Inc., which has successfully spun some of its own divisions into standalone companies, said that companies in their forest-product industry have long been trending toward “niche” standalones that only handle a specific part of the industry.

She said that while it varies in industry to industry, customers often prefer to use a company that does one thing, and does it well.

Greber said startups like these often have at least a slight advantage because they have built-in experience from personnel.

“I think the advantage that it can sometimes have the opportunity to seat management talent into the startup, so it’s not as much a roll of the dice as it is with other startups,” he said.

Ryan said that some employees from Premier would be leaving for the new companies, but “key” personnel are staying.

“Our key managers in all our departments are staying the same,” Ryan said.

Sayer is, of course, leaving, but both Sayer and Ryan said his involvement in Premier would still be substantial. Sayer will remain president and chairman of the board for Premier.

“Doug has always provided overall direction,” Ryan said. “Doug will still provide overall vision and direction and I will handle day-to-day (operations).”

Sayer said the new products, which were all developed at Premier, could have easily stayed under the Premier umbrella. The decision to split them out was closely related to marketing, he said.

For example,  a third party customer probably wouldn’t trust a manufacturer to sell them software, Sayer said.

All three of the new companies will have support from Premier in the form of contracts to either use services or, in the case of the shock absorber, manufacture a good.

But Premier will still have its own purse strings kept separate from the new companies’ bottom lines.

Greber said it’s up in the air as to whether that is a positive for the startups.

“The only potential (concern) would be, and you could argue whether this is a strength or a weakness, you are cutting off the deep pockets,” Greber said. “So the companies, if they have cash flow issues, cannot go back to the parent. So you lose that safety net. So the argument for a startup is, was that a safety net or a crutch?”

Sayer said the overall plan for the companies to produce more Premiers — well-to-do businesses that employ people in southeast Idaho.

He has no estimates on how many jobs will be created by the new companies, but the shuffle in spinning off the companies has given a few long standing employees a promotion, he said.