Kasalis: Driven by Value

September 2014

When you’re in a truly niche business, competitive differentiation becomes a critical factor. Burlington, Massachusetts-based Kasalis knows what it takes to thrive in a narrowly defined market. Established in 2011, “Kasalis provides advanced Active Alignment manufacturing capital equipment for optical systems. Active Alignment is an advanced manufacturing technology that enables a much higher performance out of optical products (i.e., the sharpest images) than is possible using traditional assembly techniques,” explains co-founder and CEO Justin Roe. “We do that by simultaneously powering up the product and looking at the images it produces while actually manufacturing it. Think of it this way: It’s akin to driving a car while you’re building the engine, so that you can tune it to its best performance every time.”

Kasalis’ technology can be found in the micro cameras in mobile phone, sports cameras, automotive, medical devices, and drones; in the gesture-recognition systems in next-generation computers, mobile phones, and TVs; and in wearable technology, such as glasses.

So how does Roe define the Kasalis difference? “In a word, it’s about value,” he avers. “We want our customers to make better products and further increase their profits by spending a dollar with Kasalis as opposed to spending that dollar any other way. By buying our Active Alignment technology, our customers can turn a very competitive business—consumer product manufacture—into a higher-margin business. Everything we do, every technology we develop, and every product we design is created with that value proposition in mind. We want our customers to love us, and come back to us because we deliver on our value promise every time. Once you stop creating value for the customer, margins start coming under pressure, which, in turn, would put our margins under pressure.”

That value is based on what Roe terms “embedded intellectual property,” which drives technology development and the manufacturing process at Kasalis. “Massachusetts is not the place for low, value-added high labor content manufacturing. However, it is a great place for high value-added manufacturing, where the value is in the technology. So all our systems are designed with the highest amount of embedded intellectual property, but with very low labor content in the manufacturing,” he adds.

A range of processes coalesce to get the value Kasalis promises. For example, the company utilizes Design for Manufacturability (DFM) techniques extensively in making its design decisions, which takes into account manufacturing with the lowest possible labor content; employs Lean Manufacturing to optimize productivity on the manufacturing floor; and uses modular design to develop the core functional parts of its systems. The latter means that each module is completely self-contained and can be mixed and matched quickly to customize a system to customer needs.

The result? “Our customers buy our Active Alignment technology to make far higher-performing cameras and more accurate gesture-recognition systems,” Roe asserts. “In some cases, manufacturing is just not possible with any other technique. But there is another side to using Kasalis’ Active Alignment technology: The yield of these products increases substantially, meaning that you need to throw away significantly less defective product. The savings from this increase in yield alone can pay for our systems.”

The numbers bear Roe’s approach out. During its first 18 months, Kasalis focused on technology and product development. “However, during the following 12 months, we built $8 million in revenue, with a very healthy EBIT. At this point in our evolution, we are a strong, established company, yet still with the energy of a startup, projecting 100% growth during the next 12 months. We now serve major, brand-name clients in Asia, Europe, and North America.”

A sound vision and a good direction can certainly act as the foundation for success, but Roe acknowledges that getting Kasalis into the marketplace required strong financial help. “As a startup, we had a solid business plan, and a seasoned team, but the company itself did not have the long history that most banks demand,” he says. “Yet, we needed funding for work in process for us to ramp up staffing to meet our orders. Salem Five and senior vice president Gordon Massey took the time to learn about our company, its people and their track records, its market, and its customers. They looked beyond our short history, bringing in advisors from the Commonwealth of Massachusetts, and even an export bank from New York. I wanted to work with a local bank where I could build personal relationships, and not have a different bank manager every week. Trusted, personal relationships are very important, and that’s what we have with Salem Five.”

Salem Five Resource

Funding Starup Success

In 2011, Justin Roe co-founded optical technology firm Kasalis with a focus on value. He had the right plan and the right team in place, but needed financing. Turning to Salem Five, Roe says that “once Salem Five learned about our plan and long-term needs, we were given a few different options for us to move forward and fund our growth. We ended up with a good low-cost loan with minimal fees, and more importantly, with minimal extra overhead. We do all our commercial banking with Salem Five and trust them to help us come up with solutions when we need them.”

Learn more about how Salem Five can fund your growth or call Gordon Massey at (978) 720-5949.