(Read an accompanying blog post about Bluecat’s marketing here

Some say success is fleeting, but for Richard and Michael Hyatt, it’s the family way.

In 2001, armed with just four employees, some development ingenuity and no outside funding, Richard and Michael Hyatt set out to distribute secure, scalable and reliable IP network hardware.

Today, Bluecat’s appliances are used by organizations that process highly sensitive data, including national security and financial services agencies, and the company boasts a diverse list of clients.

Ernst and Young, George Washington University, General Motors, and CB Richard Ellis are but a few of the organizations with high praise for Bluecat’s products.

Bluecat goes South

But the Toronto-based company took an unconventional approach. Instead of reaching out to co-patriots, Bluecat marketed to US companies. “The US market is just filled with opportunities,” says Michael. “When you’re starting, don’t focus on Canada or Asia, focus on the States.”

Their strategy worked. With products that help organizations manage dynamic IP assignments, control name services, and improve network throughput, Bluecat has sold thousands’ of Proteus IPAM platform and Adonis appliances since 2001.

The numbers are good: between 2002 and 2006, Bluecat’s revenue grew by 1,219%, earning them an 18th place ranking in Deloitte Technology’s 2007 Fast 50—a pretty impressive feat for a company founded by a University of Toronto dropout (Richard) and a guy whose lone business course was in the ninth grade (Michael).

Richard and Michael Hyatt, founders, Bluecat Networks

“The harder I work, the luckier I get,” Michael, Bluecat’s CEO, chuckles from his North York office.

How Bluecat finds—and keeps—great people

What makes his company successful, Michael says, is people. “Great people are attracted to great things and great things attract great people,” he proclaims. The “dumbest person in the room principle” guides Bluecat’s hiring processes, Michael explains—in other words, only hire those who are smarter, more capable and more talented than you. “Otherwise, why are you hiring them? You could do the work yourself,” he adds.

Attracting effective professionals is one thing, but keeping them is another achievement altogether. Bluecat’s remarkably low 3% turnover rate is a combination of many things, but starts with content, motivated employees.

Adonis, one of Bluecat’s product families

Nobody has a chance to rest on his or her laurels. At Bluecat, there’s no such thing as “busy work”. “Everybody here is maxed out, but people actually love coming to work everyday,” says Michael. Bluecat has been able to harness and maintain a startup’s energy, even as it grows to a mid-stage organization.

There are monthly and quarterly bonuses and most of the employees have founding shares in the company, Michael explains. An on-site cafeteria also offers $2 salmon and salad lunches on any given day – a bargain for Bluecat’s well-compensated employees,

Choosing the right people certainly helps them along, but so does bucking the trends.

Proteus, Bluecat’s Enterprise IP Management Appliance family

The ties that bind

Working with siblings is rarely easy; family dinners become business meetings, disputes become vitriolic, and sibling rivalry can threaten the business’ foundation. The Hyatts feel their family ties are beneficial.

“Blood is thicker than water and these relationships have greater resilience,” Michael explains. Most employees are forced to repress their feelings of anger at work, often culminating in profound resentment for bosses, co-workers or the organization as a whole.

Employees have, regrettably, few options. Name-calling, finger-pointing and screaming matches between co-workers is rarely forgiven. But between family members, these incidents are quickly forgotten and balance is restored in the relationship—and business.

Success is in the family

Balancing families ties is one thing, balancing the books, however, is another feat altogether. Most start-ups seek venture capitalists and angel investors, but the Hyatt brothers built Bluecat without selling shares and without any venture capital funding.

Bankrolling your own endeavors, Michael explains, is the best way to sow and reap success. “My advice to your readers is to not sell any company shares. Any company worth building is worth building yourself.”

Having a bankroll padded by a currently successful business makes self-financing much easier to bear.

In 1993 Richard founded Dyadem International Inc. a risk and quality management software company that works with 85% of Fortune 500 companies.

Dyadem boasts not only an impressive client list but also a wide range of products and services that target a diverse number of industries. Risksafe, Dyadem’s software solution for conducting job safety, job task and confined space analysis, is used by industry juggernauts such as Gillette Co. and Liberty International Underwriters Canada.

Richard and Michael no longer work at Dyadem, but they’ve maintained ownership, and a fair share of the company’s success. “If you hire the right people, you don’t need to micromanage everything,” Michael says, reiterating the importance of the proper hire.

With two successful brothers at the helm, a growing roster of happy clients and a commitment to talented staff, Bluecat may one day be referred to as ‘blue chip’.

Share this story