Could NZ have the Dyson of nail guns?
A dyslexic millionaire management consultant reckons his company has produced the Dyson of nail guns. And he's pulled corporate hard-hitters Rob Fyfe, Simon Allen and Mark Binns into a bigger dream.
Tucked into a Ponsonby street among the cafes, the real estate agents and the yoga salons is a 17-person business making nail guns. No, nothing to do with nail salons - though you are more likely to see those on the street.
No, these are serious builders’ power tools. The sort you use to put a house together. But this is a nail gun company with a difference. It’s the product of a midlife crisis, some potentially revolutionary technology, and three serious Kiwi corporate high flyers - former NZX and FMA chair Simon Allen, former Air NZ chief executive Rob Fyfe, and former Meridian and Fletcher CEO Mark Binns - lured onto the board of a start-up.
Oh, and the Kiwi nail gun has recently gone up against some of the world's best industrial design ideas - and won.
There are two beginnings to this story: the story of the nail gun, and that of the man who brought it into commercial production.
The first began a decade ago, with some builders in their backyards frustrated with the performance of their framing guns. There might have been some beers and a barbeque involved at some stage.
The builders, or their mates, liked the idea of trying to devise a better nail gun. They took the problem to some mechanical engineers, who came up with a system that uses compressed air, not electricity or butane, to power nails into wood.
This allowed them to get rid of any sort of combustion system, and also with batteries, power leads, fans, and chargers. There were no electronic parts, so no problems with water, and no spark to create a fire risk. There was no carbon dioxide or carbon monoxide released when the gun was fired, and no battery to dispose of.
It was a totally new way of making a nail gun. The Dyson of nail guns. But like with vacuum cleaner revolutionary James Dyson, it took several years, numerous prototypes, and in this case three million nails fired using automated rigs, to get there.
The second story involves Andy Coster, a bright but seriously dyslexic kid adopted as a baby into a family in South Auckland. He struggled to read but studied science and maths at school, and commerce at university, switching from medicine because he wanted to help his parents and sister financially and reckoned commerce was a better option for that.
The dyslexia meant his wife would go to some of his lectures to help him with note-taking.
After uni, Coster worked for global management consultancy company AT Kearney in London and Sydney, then for Chris Liddell (now a Donald Trump senior staffer) at NZ forestry company Carter Holt Harvey.
By the time he was 29, Coster was running CHH’s commercialising unit Oxygen Business Systems. Being bald made him look older, he says, and that was an advantage.
In his early 30s he started his own research company, Conversa Global. He and his wife had two children, both dyslexic.
By the time he was 40, his company had been bought “for a life-changing sum” by ad agency group WPP.
“I needed something to do”
Coster basically retired, happy to be spending lots of time with his family.
But in the end, he says, he needed a business challenge too.
“I needed something to do and I had put money [into Hammerforce] in 2009, as one of its first investors. I could see the potential and I started getting more engaged in the physics. I realised if we could come up with a way to create a force just using air, there could be lots of applications.”
By the time Coster joined the company in November 2016, Hammerforce already had a patent over the compressed air technology - “a piece of paper you have to have a major in Shakespeare to read”. But it didn’t have a product it could use to demonstrate the technology worked.
“We had to create a nail gun people were going to like and it was going to have to have branding and be mass produced. I knew no one would believe us unless we brought something to market," Coster says.”
In October last year, Hammerforce sold its first Airbow nail guns to hardware chain Placemakers under a three-year exclusive deal. Its second product, a gun which can shoot nails into concrete and steel, will be launched in October.
In June, the Airbow nail gun won a gold medal in the industrial product design category of the London Designweek awards. It beat designs from Philips and IBM. Two months later it won a silver award in the commercial and industrial products category of the Industrial Society of America’s International Design Excellence Awards. Previous winners include the Apple iPhone, the Tesla Model S and the Oculus Rift.
Hammerforce Technology’s office is in a small arcade off Ponsonby Road, but the factory/workshop is 300 metres away, down a side street. It’s a scruffy mix of tools, parts, blocks of wood and slabs of concrete. When I'm there, workers are sharing fish and chips for lunch.
There are a couple of small tents - like mini square marquees - for nail gun demos and testing. Coster hands me a nail gun in each hand and talks about the ergonomic difference between the Airbow and a rival product. Something about how the weight distribution puts less strain on your arm.
It’s a sales pitch, but who gets lucky enough to fire nail guns during their working day?
I put on goggles, prime the gun, pow pow pow. There’s an adrenaline rush and three big nails embedded in a block of LVL - a particularly hard wood, Coster says.
I experience the carbon monoxide smell when I fire the rival product, and the gunpowder smell when we move back into the main room and test the rival concrete/steel nail gun. Coster shows me the metal safe at the back of the room and explains it's there because the caps for the competitor’s nail gun contain explosives and explosives have to be stored in a safe.
That’s part of the pitch too, of course. He's telling me you don't need a safe for the Airbow concrete gun, because it runs on compressed air. Also, you don’t need a battery or a power cable; you can just top up when needed with a roll-along compressor - maybe once or twice a day depending on how many houses I intend to put up.
As an aside, I note the compressor bears an eerie resemblance to a black version of the Noo Noo from the Teletubbies. Malevolent Noo Noo.
You have to be a certain age to get that joke.
The nail gun parts are manufactured in China and assembled in Ponsonby. And unlike many competitors, Airbow guns doesn’t need proprietary nails, Coster says. That keeps costs down for builders.
“This is a game changer. Our framer can use any nails - we’ve unbundled the nails from the gun. There’s no gunpowder, no earmuffs, and all our stuff is waterproof. You can put it under water.”
Big name backers
Getting the compressed air technology to work and then commercialising the nail gun hasn’t been easy - or cheap. Over the last three years Coster has raised $15 million from private New Zealand investors in three $5 million capital rounds. Now he’s working on another round - this time for $10 million.
Hammerforce is still aiming at local high net worth individuals, and Coster is confident he’ll get the new money.
Existing shareholders include the company’s four non-executive directors - Simon Allen, Rob Fyfe, Mark Binns and James Drummond.
And that’s where what might have just been a straightforward Kiwi entrepreneurial start-up success story takes another strange twist.
These are some big hitters for the board of a pretty small company.
- Simon Allen was the inaugural chair of the stock exchange (NZX) and of the Financial Markets Authority. Before that he spent two decades as the head of ABN Amro NZ.
- Rob Fyfe is a former CEO of Air NZ and also of Kiwi merino clothing success story Icebreaker.
- Mark Binns headed Meridian Energy for seven years, including overseeing the company's $1.9 billion shift onto the stock market. Before that he led Fletcher Building’s infrastructure and construction divisions.
- James Drummond is CEO of UK-based survival technology company Survitec and has held three other CEO positions, as well as being at Honeywell Aerospace, and a Scots Guard.
Remember, this is a company which has had a product in the market for less than a year, with no overseas sales, only one customer (Placemakers), and no thoughts of a stock exchange listing.
Binns, Hammerforce's chair, came onto the board at the end of 2017, the same month he left Meridian. He’d worked alongside Coster during their time as school trustees at private Auckland girls’ school St Cuthberts and he liked “the quality of his thinking and his energy”. Binns thought the nail gun technology “appeared to have some real applications on a large scale”, and he relished the challenge of an SME after his years in the corporate world, where he says he was seen as a relatively conservative CEO.
In retrospect he probably didn’t expect to be landed the task of taking the minutes at monthly board meetings (“I’m not particularly good at that”), and he's not so hooked he has branched out into other entrepreneurial gigs. But he’s enjoying the change.
“Start-ups are high risk, dynamic; decisions have to be made quickly. That’s very different from the corporate world and that was part of the challenge.”
Binns sees his role as the “grey haired old fella” acting as a sounding board for problems or opportunities that might arise with suppliers, contracts, distributors or customers. Chances are he’s come across that situation before, or one like it.
He’s also built up plenty of contacts over the years, he says, many of them in the construction sector from his years at Fletcher Building. It’s probably no coincidence that the Airbow nail gun is being sold through Placemakers, a Fletcher subsidiary.
There’s a decision to be made and I say ‘Let’s do it” and they say “Oh my God, shit’. And that’s a healthy tension.
Coster describes Binns as a “man of integrity who brings no-bullshit common sense thinking” to the table. Fyfe describes him as “intriguing”.
“Mark looks very mainstream corporate, but when you meet him he’s one of the least corporate guys I know. He’s very dynamic and agile. Maybe there’s been some metamorphosis since he left the electricity industry?”
Coster describes his board as “frustrated entrepreneurs”.
“They love the risk taking - and they don’t. There’s a decision to be made and I say ‘Let’s do it” and they say “Oh my God, shit’. And that’s a healthy tension that’s going to help us succeed.”
Fyfe says there’s actually a different sort of risk when you put a whole load of ex-corporate types on a start-up board.
“I remember listening to Michael Stiassny when he was at the Institute of Directors, saying if you are a small business, the worst thing you can do is bring in big corporate directors because you get a governance model that’s too onerous for a board that size. They will tie you up with risk management.”
On the other side, having hard-hitting board members challenges Coster’s thinking (“they grill the hell out of me”), and they bring a wealth of contacts in different areas, including investment, he says. They also bring credibility.
“If I want to go overseas, to take the company global, I want experience around me to give confidence to investors, customers and channel partners.
“These [board members] have seen a lot of shit in their day and have done due diligence themselves to put their name on the line. This is a tangible demonstration to others that the product and the company have potential and credibility.”
Next step: international licensing
Nail guns are cool. Especially ones that blast into concrete and steel. But power tools aren’t where Coster sees the future of his company. Instead it’s about the air compression technology behind the nail gun, not the gun itself. And it’s not in New Zealand.
In fact New Zealand is simply a test market, Coster says. The aim from now on isn’t to commercialise more products - an expensive business - but to license the Hammerforce compressed air mechanism technology to third parties, probably overseas, who can incorporate it into their products.
“Where many companies go wrong is they build a product and then they think ‘Now what?’ You have to build a company with processes and systems.
Coster says Hammerforce is in “advanced talks” with several companies across a range of industries. "Aviation, construction, marine - any industrial application which requires a force,” he says. “Mining, fire control, oil and gas, pest control...”
Pest traps don’t need to look pretty.
Imagine a trap which could shoot a possum, for example, and then reset itself using the same compressed air, Coster says. Useful.
“We expect to have news of a future application outside nail guns to announce before Christmas.”
Actually, Coster says if he was starting again, his test product wouldn’t be a nail gun at all, but something way simpler. Preferably something that wasn’t a retail-orientated gadget and therefore didn’t need cool product design.
No one’s being specific about what the next product is likely to be, but pest traps emerge in conversations with Coster, Fyfe and Binns.
“Pest traps don’t need to look pretty,” Coster says
And the future?
Depends who you ask.
Coster: “I see no reason why we shouldn’t be a $US1 billion company in five-10 years. If you look at the people around the board table, that’s more validation than me. And I can see an international company of that value because of the leveragability of our technology.”
Fyfe: “I think this is truly disruptive technology. I think we will find ourselves partnering with genuine global players across various industries that can use the technology to create transformative advantage for them across their industry.
Maybe, maybe not, says Binns: “There’s no guarantee of success, we’re still in the start-up phase. The technology has apparent applications in a number of industries. If that can be converted to real competitive advantage and that’s picked up offshore by world-scale manufacturers, the opportunities are significant. But we’ve got to get there.”
He’d prefer to under-promise and over-deliver, he says.
A corporate head among the entrepreneurs.