America's coolest company: How Big Ass Fans went from cooling cows to a multinational tech powerhouse

This article was originally published as a TechRepublic cover story.

There's no faster way to spoil the magic of a visit to a major theme park--you know the one--than waiting in a long, sweltering line to enter a ride. The park knows this, of course. But maintaining traditional fans that keep queuing customers cool was turning into a nightmare, leading effectively to a fan ban.

Before an international branch of this major theme park opened its gates in 2016, operators contacted a new source for help across the Pacific. It was not your typical Silicon Valley startup, but Big Ass Fans, a Lexington, KY-based provider of, well, insanely big fans. The company has leveraged top-notch R&D, Internet of Things (IoT) technology, and its cheeky branding to build and lead the market for quiet, energy-efficient industrial and residential fans.

Big Ass Fans worked with the park to develop fans that could quietly and cost-effectively cool customers down as they waited in lines for attractions. One ride was re-created in the company's massive R&D facility to add in wind effects that enhance the experience.

From dairy to Daytona

High-profile custom projects for companies like this were far from the company's original plan. It was founded in 1999 with the decidedly less amusing name HVLS Fan Co., which stood for "High Volume, Low Speed." Founder and former CEO Carey Smith had been working with a company that provided large, slow fans for farming, based on research that found that if you keep cows cooler, they eat more, and produce more milk. He saw other applications in industrial warehouse spaces, and HVLS Fan Co. came to be.

The first fans were marketed for factories and dairy barns, but word spread, and the company began picking up customers across different industries. Those customers would call and ask, "Are you the ones who make those big ass fans?" and a new name was born.

About five years in, customers began installing the fans in commercial air conditioned spaces, like restaurants, churches, and schools. So in 2008, the company introduced a commercial line of industrial fans with silent motors. When more people inquired about using the fans in homes, the company spun up a premium ceiling fan brand called Haiku in 2012. Haiku included smart home integrations and lighting. Big Ass Fans also started an industrial lighting business around the same time, since some of its big customers began asking if they could do lighting solutions along with their fans.

Today, Big Ass Fans can be found in a huge variety of locations, ranging from Planet Fitness to Walmart to Punta Cana International Airport to Daytona International Speedway to Lambeau Field to a nudist camp in Canada.

Big Ass Fans has 775 employees with offices around the globe, and its sales increase an average of 30% per year. It has made the Inc. 5000 list of fastest-growing private companies for 11 consecutive years. And its fans and lights are now sold in 190 countries, and to 70% of Fortune 500s--quite a long way from a niche dairy barn product.

"The culture within Big Ass was disruptive in everything it was doing," said former president and COO of Big Ass Fans Jonathan Bostock. "If you think about the core product--a big fan to solve heating and cooling--it's very basic technology. But to take that direct globally and be as aggressive as the company was to sell directly to Fortune 500s, that is truly an innovative go-to-market scheme."

How did a fan company with roots in cooling livestock grow into a $260 million business? TechRepublic has the inside story.

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A transparent culture

Big Ass Fans' Kentucky headquarters sits mere miles away from rolling hills and horse farms, but inside, the vibe is more akin to a whimsical Northern California startup. Situated on the north side of Lexington, a bright yellow statue of the company mascot--a donkey named "Fanny"--welcomes visitors in the front door of one of the newest buildings on campus.

Installations from local artists--including a wooden version of Fanny, and a Big Ass Fans-branded motorcycle--line the hallways. A wall of patents on placards in the reception area includes Big Ass Fans designs, but also a gag patent for fire, created by Grog the Destroyer, of noted research university Under Big Leaf.

Employees are treated to a free fruit cart that is replenished each day, along with an on-site cafeteria and game area with ping pong and foosball tables. When the sales team hits a goal, a gong rings out, and a beer fridge is opened at the end of the day. Monthly employee outings include white-water rafting trips, bowling, and baseball games.

Smith--who sold the company in October 2017 to an equity firm for $500 million--said he built transparency into the employee experience from the start.

"If we were very transparent as far as the customer was concerned, that meant we had to treat our employee in the same fashion," Smith said. "If you're going to have third-rate people taking care of first-rate customers, how the hell is that going to work? It doesn't. So everybody that's working with you has to feel like they're equal to the customer in terms of the way they're treated."

That ethos also led to higher salaries: Employee wages exceed the national average by 30%, according to the company.

Even with large salaries, employee satisfaction is strongly tied to the Big Ass Fans brand, internal surveys found.

"We'll never kill what makes us special," current CEO Lennie Rhoades said. "One thing that came through clearly in the surveys is that 'We're not perfect, but I like to come to work here. I love the fact that we don't take ourselves too seriously, and that we have a great product.'"

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Applicant 'acceptance rates' lower than Harvard

One of the major advantages to the Lexington location is proximity to the University of Kentucky, Rhoades said.

"We're a very desirable employer," he added. "It's recognizable, it's a little bit hip, it's on that kind of edge. We've been able to attract the cream of the crop."

During 2016, 11,125 people applied to jobs at Big Ass Fans. Only 2.3% were hired, making the "acceptance rate" to work for the company more difficult than getting into Harvard University (which recently hit an all-time low 4.59% acceptance rate).

Like many Silicon Valley startups, the average age of Big Ass Fans employees skews young, at 36 years old.

"It's a very young group of folks, and what they care about compared to what the 50-plus generation cared about differs--everybody wants to get paid, but work-life balance and some of the social things become even more important to them," Rhoades said. "They can go find a paycheck anywhere, but not that work environment."

Despite the opportunities available, Big Ass Fans does struggle with the gender gap found at many other tech and manufacturing companies: Women make up just over 30% of the workforce, and 15% of management roles. However, the company has made steps to increase those percentages, including taking the STEP Ahead Pledge issued by the Manufacturing Institute to bring more women into the field. Several female engineers at the company have also been active in mentoring female STEM students.

Transparency was built into the design of the office, with open spaces not just offering a modern look, but better potential for collaboration between departments, according to sales operations manager Jessica Czirr. "People have the opportunity to hear things and conversations that they wouldn't normally hear in a closed office environment," she said. "It creates a line of communication."

Since the company has grown so quickly, employees had the chance to step into new roles and take on new responsibilities that usually would not be possible, Czirr said. "There's a lot of professional growth," she added. "There were interns that are now in analytics, and people who started in manufacturing who are now in sales. With the right drive and the passion, people can just have that at their fingertips, to be able to do what they want."

A job rotation program allows staffers to move more easily between positions they are interested in. Much of the program's success is due to Big Ass Fans' general rule of hiring people for their skills, rather than for a specific role, said global director of people and culture Samantha Couch. The team purposefully seeks out people who are hardworking, intelligent, and curious, who will be eager to grow and evolve along with the company, Couch said.

For example, five years ago, the company had just started its residential division, and has since become a leader in the smart home industry. One of the reasons for success in the space was the home-grown analytics department. Director of analytics Whitney Bransom came into the space from the sales team, along with two other analysts. These employees were eager to learn new skills, and the company offered training to make it happen.

The open office environment and employee mobility also allows for ongoing coaching, Czirr said. Managers never want to wait for a formal yearly review to ask their employees what they want to be doing. "We want to know what people want to do and help them get there," Czirr said. "We want to find their skill sets and their passion, and figure out how that best can help the business grow, and how we can help foster that."

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A major investment in R&D

Despite the fun name and contemporary atmosphere, Big Ass Fans employees are dead serious about product development.

"You have to be exceptional to carry a name like that," said James DeSmet, vice president of global operations. "It's one thing to make people laugh at your name. It's another thing to make them disappointed once they get your product if it doesn't live up to it."

Smith prioritized the research side early on in the company's history. In 2008, the former CEO invested $8 million--or one-third of the company's annual revenue--into a 45,000-square foot R&D facility to ensure the company could make the best products at the time and in the future. Today, it remains the world's only R&D facility purpose-built for studying HVLS fans.

"That is a maniacal investment strategy in the future of the company," Bostock said. "That's something that not a lot of companies do."

Big Ass Fans then moved very quickly into new markets, DeSmet said. "It was just, 'There's a problem, let's go fix it. Let's make a market, let's sell it,'" he said. "And it was very, very fast paced. For a lot of the engineers, it was very freeing. If you leave them to their own devices, they will get things done the fastest way possible."

Customer feedback with a focus on improvements was key, Smith said. "I told the guys that ran that department that I didn't want to get some slaps on the back--'Hey, you guys are doing a great job'--because that's easy, and you don't learn anything from somebody telling you you're doing a great job," Smith said. "Their job was to delve into exactly what the customer disliked about whatever we were doing, even though it might appear to be minor."

The R&D facility, located across the street from the headquarters in Lexington, was one of the first LEED Gold facilities in the state, said research and development manager Jay Fizer. It includes a 100-by-100 foot cell, with a ceiling height of about 55 feet, to properly test the large, 24-foot fans, as well as smaller spaces for the smaller options.

The team tests fan airflow rate, efficiency, input power, and motor conditions to make sure that products are operating within a safe range.

"We have a funny name, and that resonates with a certain market," Fizer said. "When you go into the more serious folks--the architects, the engineers, the professional organizations--you definitely have to be on your game, and know your subject matter very well."

One notable test case was for the Oakland Unified School District in California. The district was building a new school, and wanted to eliminate air conditioning from its operating expenses. The district's architecture engineering firm reached out to Big Ass Fans to figure out what they needed to solve the problem. A Goldilocks situation arose as they tested their current fans: One was too big, and one was too small.

"We worked to custom design a fan that would maintain air speed that cooled the children in the school, but not be so disturbing as to blow papers off of their desk," DeSmet said.

The company designed and manufactured the fan, and then set up a model classroom in the R&D test lab, filled with school desks, papers, and mannequins in place of students. "That was a great example of how we could take a problem, design it, manufacture it, test it, install it, and work with the customers end-to-end," DeSmet said.

Ultimately, that investment in R&D has given the company an important competitive edge for innovation, DeSmet said. That's been critical, despite the fact that Big Ass Fans is the market leader and its competitors are struggling to keep up.

"Any company that sits on their laurels and waits for the next great idea to come to them is going to lose," DeSmet said. "You have to innovate."

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Cool ROI for customers

Big Ass Fans' founders discovered early on that cooling cows made the animals happier and more productive--and soon realized that the same was true for human workers.

"It turns out people are very similar to cows--when they're uncomfortable they don't work hard, there's employee turnover, there's dissatisfaction," said Alex Reed, global director of marketing at Big Ass Fans. "The technology extended very well into the industrial space for distribution centers, manufacturing facilities, et cetera."

The product line evolved to meet these customer needs and new opportunities, and now includes industrial, commercial, and mobile and mounted fan options. Today, Big Ass Fans offers 11 different styles of fans, ranging in size from the 53-inch home ceiling fan Haiku to the 24-foot industrial fan Powerfoil X3.0. Most options can be customized by color or design.

The industrial fans create a cooling effect of 10°F in summer, and keep air temperatures consistent in large warehouses, hangars, and factories in winter--resulting in up to 30% reduction in heating and cooling costs, according to the company. The commercial ceiling fans feature whisper-quiet motors to cool spaces like offices and gyms, while the mobile and mounted fan offerings are meant for spaces like factories and event venues, and can cool spaces from as far as 120 feet away.

"There's really not a person in the world who shouldn't be a customer," DeSmet said. "We serve residential, commercial, and industrial."

Another notable case study is British Airways. One hangar's upper mezzanine felt up to 20 degrees warmer than the ground floor when heaters were running, making working conditions too hot on the upper level and too cold on the lower level. As a solution, the company installed five 24-foot Powerfoil X fans--Big Ass Fans' largest and most durable industrial fan option--to push hot air down and create a more uniform temperature throughout the hangar.

Today, the space is comfortable to work in year-round. Plus, in the first four months of winter operation, British Airways was able to cut energy consumption in the hangar by more than 2 million kilowatt hours--saving the company more than $114,000.

Butaro Hospital in northern Rwanda installed seven commercial Isis fans to constantly move air without drawing power from the gas generators that power the facility. The fans help with decontamination, circulating air over UV lights to kill airborne pathogens like tuberculosis.

On the other side of the world, Bare Oaks Family Naturist Park in Ontario purchased Yellow Jacket mounted fans, which can combine cooling with mist to drop temperatures by about 25 degrees for summer games at the nudist park.

And Lexington-based restaurant The Local Taco installed a mix of Haiku, Isis, and Essence fans in the kitchen and eating area to keep cooks and customers cool, which led managers to raise their thermostat set point by 6 degrees and reduce energy costs by about $2,000 per year.

"There's really no limit to where the fans can be installed," Reed said. "A lot of it comes down to the right fan for the right space, and selling customers an outcome instead of just a product."

In terms of sales, the industrial segment--which includes factories and distribution centers--accounted for more than 40% of profits in 2017. Close behind were the commercial spaces like schools, fitness centers, and restaurants, while the residential offerings rounded out the final 20%+ of revenue, according to the company.

SEE: 10 companies leading digital transformation in retail (ZDNet)

The potential of using IoT for big fans

The company's Internet of Things (IoT) journey got off to a bit of a rocky start back in 2011--not necessarily due to the technology itself, but to a lack of demand for it at the time, Smith said.

It was shortly after former Apple engineers founded Nest, bringing smart thermostats to market. Integrating smart technology and automation into fans to reduce air conditioning costs seemed like a natural fit, Smith said.

However, "we got way ahead of where we should have been," Smith said. "People would say, 'Nobody is asking me for an IoT fan. They're asking me for a good fan.' It was something that fit our view of a problem and completely absorbed it, but it did not fit what the consumer was looking for."

SEE: What is the IoT? Everything you need to know about the Internet of Things right now (ZDNet)

Today, as more industrial facilities are Wi-Fi enabled, and people grow more comfortable with connected devices, there is more opportunity for innovation in those spaces, Rhoades said.

"We've just begun to tap the enormous potential for the Internet of Things on big fans--things like safety, security, understanding what's going on in a facility," Rhoades said. "Those facilities are wired. They're ready to go. We happen to have products that are getting installed in places where you need to have some knowledge about what's going on."

Take moisture elimination, for example: For steel mills that want to prevent rusting, sensors on fans can monitor condensation, and a kit can be installed to prevent water from forming on the steel.

"It's very important in that industry, and a huge value proposition for those guys," Rhoades said. "Those kinds of opportunities we think we're just starting to scrape the surface of." The company is also researching sensors that can measure and improve air quality, he added.

Some of the more expensive fans in the Big Ass catalog have smart controls built in, Rhoades said.

The company is also investing heavily in the user experience, and how people want to interact with connected cooling devices. For example, on a first-generation app, people had to be on their home network to control the company's consumer fans. But customers wanted to be able to do so remotely, so that ability is being built into future versions, Rhoades said.

Big Ass Fans uses Salesforce's CRM platform and has a data analytics team on staff to mine customer data, and can search geographically, by user type, or by age, and look at trends from repeat buyers.

"We can understand who's buying our product, where they're buying it, why they're buying it, and have done a nice job of big data mining, even for a small company," Rhoades said.

The company is also revamping its website to make it an easier navigation experience for customers and improve the omnichannel experience for more seamless shopping. "We're putting a lot of thought into being able to go from my computer to my phone," Rhoades said.

SEE: Data, AI, IoT--The future of retail (ZDNet special report) | Download the report as a PDF (TechRepublic)

Direct sales: A big driver to the company's success

Selling directly to customers proved one of the biggest drivers of the company's success, Smith said. "Nobody else could tell our story," Smith said. "You couldn't expect a third party to tell a story about a product that only existed for a couple of years, so we had to structure that."

Virtually all of Big Ass Fans' competitors still go to market through an often complicated set of supplier-dealer relationships and partnerships.

The tactic of cutting out the middleman has since become more common, with companies like Casper mattresses and Harry's Razors now following suit, Bostock said. "I think the company doesn't get enough credit for truly going direct globally," he added. "Both on the consumer side, as well as the business side--that's ultimately what made it so successful, and that idea of disruption and innovation really bled through to everything about the company."

The direct sales model also led to much more direct contact with customers, and the ability to respond to feedback quickly, Czirr said.

"We are constantly absorbing information that's coming back to us from the market and from the customers, and taking that and figuring out what it means, and if we need to make internal tweaks," Czirr said. "From a sales perspective that has been what has allowed us to grow at the rate that we have."

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International expansion

Currently, Big Ass Fans products are most popular in the US, with Texas leading the way, according to the company. But international business accounts for more than 20% of overall revenue, and is still growing.

One of Rhoades' goals in his first year as CEO--which began in the first quarter of 2018--lies in further international expansion. While Big Ass Fans has offices in Canada, Malaysia, Singapore, and Australia, there remain across the globe a number of untapped markets that are very hot--including some that are literally very hot, which means the company's products have a lot of value to offer.

"We're almost not present in Europe," Rhoades said, citing Southern Europe and countries around the Mediterranean as particular areas of interest. The rest of Southeast Asia, as well as South and Central America, are other targeted areas.

"Those are places where energy is expensive, and our value proposition is tremendously high," Rhoades added.

Rhoades hired an international business director to focus entirely on this expansion. Part of this involves a sales shift from a reactive to a proactive model, Rhoades said. "We're looking at sales reps to go out and proactively knock on doors at bigger facilities," he added. "We think that could have big dividends, just improving accessibility."

Lessons learned

In many ways, Big Ass Fans represents a classic success story: Its leadership identified a market need, and sought to provide it, said Christopher R. Bollinger, director of the Center for Business and Economic Research at the University of Kentucky.

The two big lessons for the wider business community are in its marketing and focus on putting customers first, Bollinger said. "The management both worked to be sure they could provide a great product for their customers, and they looked for other opportunities where they could supply that product to a new customer base," Bollinger said.

When it comes to selling a product, "Do away with as [many] middlemen as you possibly can," Smith advised. "Get as close to the customer as you possibly can."

Investing profits back into the business to develop new products and sales channels is also key for success, Smith said.

With a donkey's behind as its logo, it's hard to ignore the impact of branding, either.

"There's something magical about investing in a great narrative and brand," Bostock said. "I think that is something that companies really need to take a step back and ask themselves, are they creating an iconic brand? If the answer is no, they need to rethink their strategy."

Big Ass Fans provides an example to the many companies with roots in the Midwest that fail to think big enough, said Suzanne Bergmeister, entrepreneur-in-residence and assistant director of the Forcht Center for Entrepreneurship at the University of Louisville College of Business. "They need to take a page out of the Big Ass Fans handbook and say, 'Hey, not only can we, but we should think more globally,'" she said.

They are also proof that operating a company from a non-tech hub offers a number of benefits, including lower cost of living so investment dollars can go further, Bergmeister added.

The people who were eager to dismiss Big Ass Fans early on because of its Kentucky roots have had to reckon with its success and valuation, Bostock said.

"Not everything happens on the coasts," Bostock added. "Flyover country is still alive and well."

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