Inc. magazine is out with the 2012 version of its fastest growing private U.S. companies. Astrum Solar of Annapolis Junction, Maryland landed the #2 spot by creating a culture, recruiting the talent, establishing a customer focus and securing utility capital to sell and lease solar electric systems to homeowners as good, or better, than any other installer in the country.
And the best may be yet to come if Astrum can navigate several hurdles, not the least of which is competition from California solar companies and moderating electricity prices from monopoly utilities due to expanding supplies and low prices of natural gas.
Astrum’s three-year growth rate of sales as reported to Inc. was 23,577% from 2009 to 2011. It was edged out for the top spot overall by Unified Payments, an e-commerce company based in North Miami Beach, Florida (23,646%). How much of that reached the bottom line in either of those years is confidential and may tell an entirely different story of whether, and how, the company can continue growing on its own.
In an interview, Astrum CEO Vadim (pronounced va-DEEM) Polikov pointed to a a focus on building an “infrastructure” at the outset to enable the company to scale very quickly. That began by creating a sense of “professionalism” and “excellence” and then finding the right people with co-founders Josh Goldberg (business development) and Ben Davis (operations, see photo at left) to put the rapidly expanding headcount to work effectively.
“We had a laser focus on residential solar photovoltaics. We didn’t touch solar hot water. We didn’t look at other renewable energies. We didn’t look at doing energy audits, selling power; anything like that,” said Polikov.
With those pieces in place, nurturing a customer experience that could stand up to stiff competition in a market once rich with government incentives from other Inc. regional fast-movers — including Standard Solar in nearby Rockville, MD (Inc.’s #73 in the 2010 ranking; #181 in 2011 and #439 in 2012), Astrum found a sweet spot.
Constellation Energy took a taste and liked it so much to make a $3 million minority investment in the company, according to a Constellation filing with the Securities and Exchange Commission. That investment may have provided the fuel for Astrum, founded in 2007, to leap forward, at least in terms of sales. The company reported $26.9 million in sales for 2011 with 150 employees (it has about 175 now).
Standard Solar, founded in 2004 (whom this writer worked for from 2008-2010), registered $42.7 million in sales with 80 employees in 2011. Standard Solar also got its start focusing on the residential market but has since gravitated more toward large commercial and utility scale PV systems.
Booming supplies and low prices of natural gas, which were barely on the horizon when Polikov, Goldberg and Davis founded Astrum in 2007, now confront all solar companies because they cannot credibly assert electricity rates are going to rise 5+ percent each year. That inflationary factor has made it easy for some solar installers to sell against.
Going forward, the electricity supply portion of the utility bill may actually decline for many households. Even homes with solar systems cannot escape charges for distribution and transmission needed to deliver electricity and maintain reliability unless they are off the grid entirely.
That’s a challenge now, Polikov says, “because we’re always competing against the alternative for the customer, the utility company.” Add to that are California solar leasing companies such as Solar City, Sunrun and Sungevity. Each has found Maryland to be a ripe market. Every company is buoyed by falling prices for solar panels, a majority of which are manufactured in China.
What still makes deals work for Astrum are 1) the customer wanting to be greener with their renewable energy and 2) becoming less subject to the utility’s rates. Note: because a home solar electric system is tied to the grid, when the power goes out, so do homes with solar electric systems. A large battery backup system that stores power generated by solar panels can run essential appliances and a few lights for a few days, but typically not much longer.
Before Astrum, Politkov co-founded American Journal Experts, an academic publishing enterprise, and Ultrasound Ventures, a scientific medical device company. He knew Goldberg growing up in Maryland and roomed with Davis at Duke University, where Polikov earned a Ph.D.
Polikov said they chose Astrum for the name because “astra” means “stars” in Latin.