By Eric Peterson | May 31, 2020
Axel came to Colorado from Minneapolis and worked in sales for a different conveyor manufacturer before striking out on his own with Fluent.
"I saw this industry being set in its ways and not really open to change," he says. "I just saw an opportunity to provide better value to dealers and customers."
With a background in software sales, Axel co-founded Fluent with an engineer he'd worked with at his previous employer. "We always put the software side first," he says. "We're trying to automate as many things as possible to make sure the customer experience is as sound as it can be."
An e-commerce division has helped generate residual revenue. "We're building SaaS applications that can feed our [dealer] network . . . so they can manage current projects and aftermarket processes online 24/7," says Axel. "Every stage, we're going to give transparency to the resellers so we don't have to manage it anymore."
The resulting consistent cash flow "removed the volatility and the stresses around an up-and-down business model," he notes. Cyclical sales led to "up and down" revenues at his previous employer, and he saw an opportunity to market excess capacity as a contract manufacturer, but the plan never came to fruition. "I saw that as an opportunity to bring residual income into the business," says Axel.
At Fluent, he opted to work with an outside manufacturer to avoid that problem altogether. "Our outsourced manufacturing has 45 people," says Axel. "We get to leverage that. . . . They're a great partner."
The contract manufacturer is a longtime OEM of its own equipment with a focus on agriculture. "The pressure doesn't reside on us," says Axel. "Once we pass that off, they have an internal obligation to their company to perform so that they can make money on it. I don't have to manage that. I don't even hear from the guy."
The model is a great fit for the company. "Our margins aren't quite as high, but I think our profitability is better," he says. "I didn't know how it was going to work, but I would never go back to the other way. . . . We can focus on our core things, developing our software and our processes, to serve the dealers and customers better."
Fluent's forte is "sales, marketing, and engineering," he adds. "That's where we can do a better job, and we didn't want the overhead of a manufacturing facility because of the volatility."
When agriculture isn't buying, waste and recycling often is, buoying the troughs in the OEM's output. Notes Axel: "It's great for them and it's great for us, and it removes the volatility from A to Z."
Waste management and recyclers make up about 80 percent of Fluent's sales; custom work and package handling is the remainder. "We've sold to Anheuser-Busch. We've sold custom stuff to Procter & Gamble, but the core market is waste and recycling."
The Fluent catalog includes roller chain, slider bed, and idler trough conveyors, and the company also designs custom systems. The selling points: a CAD-based design process, resilient hardware, thorough testing and validation, and smartphone-friendly controls.
"We developed a pretty solid product from day one," says Axel. "We consistently get critical feedback versus positive feedback any way that we can to better suit our deliverables to the end users. How can we go to the end customer . . . and get feedback on this type of equipment, on things they hate and love, and build a list to develop our products around that? I'd rather have critical feedback than great feedback, because it's the only way you can improve." Guarding and access points for maintenance have been improved via the back and forth.
Supply chain, and the quality thereof, is "critical to your brand," says Axel. "If you have a motor fail, they don't care what brand it is. You sold it to them. You chose that." "We're very diligent on the front end before we start production on something. We triple validate on the manufacturing side. We literally have a checklist of every single dimension before it ships, welds, paints, components, everything."
The strategy is working. "Year over year, 50 percent, 60 percent growth is the norm," says Axel. "Right now, we're positioned to scale very, very large with our current team."
Challenges: "The biggest thing for us right now is teaching old dogs new tricks," says Axel, 38. "These guys are set in their ways and to penetrate that is extremely difficult. . . . They don't believe we can actually deliver on this product line."
Opportunities: "Our focus next is going to be package handling and distribution," says Axel, calling it a "more innovative" industry than waste management, and a growing $11 billion market. "They're driven a lot more by software. People are being forced by Amazon to do that."
Needs: "We have some process stuff internally that we're still working on," says Axel. "Every time we look at something that's critical, we're trying to make sure the decisions -- and I hate saying this -- remove manpower and create better processes."