This story is part of our Inno on the Road series, where we take a look at innovation hubs throughout the Midwest. Check back all week for more coverage on Ann Arbor’s tech and startup scene.
LLamasoft, one of Ann Arbor, Mich.'s, biggest tech employers is both “old and new,” if you ask its Founder and CEO Donald Hicks about the company's story.
While living in Utah and working out of an Einstein Bros. Bagels, he founded LLamasoft, a supply chain software provider, in 1998. But in 2000, LLamasoft merged with Ann Arbor-based Crystalize and moved headquarters to the Michigan college town.
Four years later, LLamasoft underwent a change again when Hicks purchased the LLamasoft assets back from Crystalize. At that point, he launched the “new” version of LLamasoft in 2004. Back in those days, LLamasoft was averaging a 20 percent growth rate per year, Hicks said. But in 2009, when the economy pulled out of the recession, LLamasoft started growing by 80 percent annually.
“We were pretty small, but a lot of the employees that are here and a lot of our importance economically has really grown in just the last couple of years,” Hicks said.
In 2012, they only had 40 employees and had just closed their first venture capital funding round for $6 million. Now LLamasoft employs close to 500 people globally, half of which are in Ann Arbor, and has nearly $300 million in funding from backers like Goldman Sachs and MK Capital. This year’s revenue is expected to top $70 million, Hicks said, and they are on track to exceed $100 million in 2018.
Outside of Ann Arbor, LLamasoft has offices and employees in more than 10 countries around the globe, in regions like South America, Europe and Asia.
Hicks attributes the company’s success to finding a niche in the supply chain software industry, where they’re competing with companies like Germany-based SAP or Oracle in Redwood City, Calif. Instead of just making a software that manages supply chains, LLamasoft provides software and services that help businesses redesign their supply chains as they keep up with their ever-changing industries.
“That’s our niche,” Hicks said. “It’s a tiny one compared to the vast supply chain world, but it’s also a really important one. As your business changes, you have to change the supply chain, too.”
Their clients include major Detroit-based companies like General Motors and Ford Motor Company, but they also include Wal-Mart, Ikea and the U.S. Military. On average, businesses spend about 10 percent of their revenue on supply chains, Hicks said, adding that Wal-Mart has a team of about 50 people using LLamasoft software to get the job done.
In 2015, LLamasoft acquired South Africa-based Barloworld’s supply chain software division and IBM’s LogicTools supply chain business unit, which was one of their major competitors at the time.
And LLamasoft is in advanced discussions to acquire a German-based company later this year, though Hicks could not disclose exactly which one or the terms of the deal.
Hicks said Ann Arbor’s educational and business ecosystem has had much to do with the success LLamasoft experienced since being revitalized after the 2008 recession. He relies on the University of Michigan to recruit supply chain, business and engineering graduates, and because of the university’s presence, Ann Arbor attracts a diverse set of people, which is good for business.
“Although LLamasoft is still a small community in the grand software world, our customers are really big, and they are global,” Hicks said. “LLamasoft has had to become very global much faster, and Ann Arbor has been the place where you can hire people who are more aware of the world. You can’t work in supply chain without having a pretty global perspective.”
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