As Averill recalls, “We worked for several years on some unique new approaches, and suddenly we came across some things that were working really well.” They presented their findings to General Motors, who told them to “start a company” so they could send them some work.

With MSU’s blessing, Averill and Goodman started Red Cedar Technology, Inc. And sure enough, GM sent them some work. But what neither professor could know at the time was that the “some things” that worked really well would, by 2004, evolve into HEEDS and pave a road to success.

It’s almost easier to describe Hierarchical Evolutionary Engineering Design System (HEEDS) than it is to say it. In Averill’s words, “What we’ve developed is a technology that allows engineers to design products better and faster. Most engineers build computational models that predict how what they’ve designed is going to behave; that is, is it going to meet the product criteria? And if it doesn’t, they use their intuition to manually change their models to make a design better. And they iterate many times. Often, they never get to what they’re trying to achieve.”

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“Our technology [software] … replaces the iterative process with an automated math-backed, math-based approach. So there’s a very sophisticated mathematical algorithm that searches for the best designs and then automatically makes changes to the models and does the predictions.”

Remember, the statement was “almost easier.”

Of course, technology being what it is, Averill says, “Today, we don’t use anything close to what we used in 1999 because we kept improving it, and now the ideas that we’re using are completely different; but we’ve still maintained a real healthy advantage over everybody else.”

Red Cedar Technology also had the foresight to diversify. GM is no longer their biggest customer, and in fact, the automotive sector is only about 35 percent of their business. Their software is used by industries ranging from biomedical to aerospace to sporting goods. When it comes to design applications that involve computational models, according to Averill there is almost nothing that HEEDS cannot be applied to. “Structural, fluids, thermal, acoustic… our market is not very limited.”

Used in 12 countries around the world, including Japan, India and Korea (they have no customers in the tri-county area), HEEDS is upgraded about twice a year with new features and capabilities. Averill describes their marketing efforts: “It’s not supposed to be a word-of-mouth product [but] we’re still not very good at sales and marketing, so most of our growth has been word-of-mouth, even internationally. The engineering community tends to come together for various meetings, and [they] talk a lot, so the word spreads effectively.”

“Effectively” may be an understatement. When companies buy the software, they can either buy an annual lease that gets repeated every year, or can purchase a perpetual license, which means they get the software to use forever, but only get the upgrades and support for the first year. “We have a pretty good mixture of customers that choose the annual [lease] versus the perpetual [license],” Averill says, then adds the kicker: “We have virtually a 100 percent renewal rate.”

Averill says that when most would-be customers see a HEEDS demo, or read one of the application briefs on their website, it’s not a matter of do we need it?—it’s more often where have you been all of my life? Their customers include one-person companies all the way up to the largest companies in the world. “What matters,” he says, “is that [companies] need to have engineers who are designing things using computational models,” and want to do it better. That’s all it takes.

Although the engineering economy has been kind of tough for the past eight years, today, “things are moving very, very quickly,” Averill says. “The adoption rates have increased dramatically and we’re struggling to keep up sometimes.” Red Cedar employs 12 people, including an office manager, a marketing person, a technical writer and several engineers, who either focus on development/installation or engineering/consulting. In terms of support, he explains that “[when] we do a good job with training, our support level is really very low because our product is so sophisticated that it doesn’t require that much support.” Because of this business model, Averill says that as they continue to grow, “we should be able to scale things so we don’t need to double our staff with doubling our sales.”

HEEDS is Red Cedar Technology’s only product, but they also offer consulting services. “Companies who aren’t ready to take on the product may ask us to do the work for them,” Averill explains. “We always try to encourage people to use the software, because otherwise we would have to grow too big to handle all the consulting that everybody would want. It’s usually pretty clear which companies are likely to adopt the software versus use consulting. We try not to make decisions for them. We give them the opportunity to choose.”

The company has a healthy customer base in the Midwest, but Averill says they could be located anywhere in the country. “We’re here because this is where we started and we haven’t really felt the need to move. We have families and we’re settled, and we’re not likely to leave. It’s still a great place to live.

As for the future, Averill says, “We’re probably going to stay focused on the optimization area and not venture off into other things. It’s who we are. It’s dangerous to start watering down your main product. The market is still very young and we’re doing well, so this is not the time to diversify, this is the time to capitalize in this growth market.”