By Editorial Staff
Civil and Structural Engineer recently sat down with Nikhil Choudhary and Davide Renard, two members of the engineering industry making a splash with San Francisco-based, Zenith Engineers Inc. This firm takes a unique approach to its clients, project delivery, and technology, hoping to change industry standards for service, quality, and expertise. This approach has helped them land a prestigious place on the Inc. 500 list in 2019. The journey is far from over, and Zenith’s leadership has plans for a larger West Coast expansion in 2020.
Nikhil Choudhary, CEO, founded Zenith in 2009, along with current president and CTO, Senthil Puliyadi, after seeing a need to address key areas they felt were missing from the engineering and construction industries—service, expertise, and responsiveness. Choudhary graduated from Michigan State University with a master’s degree in structural engineering, then spent several years working in general contracting and construction management before founding Zenith.
Prior to joining Zenith, David Renard spent nearly a decade in construction product manufacturing and modular construction project management. As Zenith’s vice president of sales & partnerships, he is in charge of partnership development and personnel growth management. He also sits on the board for the Society of American Military Engineers.
C+S: Your growth over the time period measured by the Inc. 500 is 1,924 percent. That’s a pretty astounding number. Which of your four major service lines did the heaviest lifting in terms of this growth?
NC: It goes back to how we grew so fast. We call ourselves recession-proof because we do service four different sectors. We take on the stuff that other engineering companies do not want to do. To the question of which division does the heaviest lifting: I would say it’s all of them together. It’s a combined effort of how each of our divisions work together for the overall gain of the company. For example, our residential division is very low-profit. It’s really hard work because our end users are homeowners, and this might be the biggest investment of their lives. But for us it’s a very small project, so just imagine the coordination that goes on if you’re dealing with 500-1000 homeowners every year. Although it’s not very profitable, it gives us a cash flow because these homeowners do not have a line of credit, so they have to pay us a major portion of the fee up front as a retainer. This balances out the lesser profit margin from the division. On the other side, our commercial division is very profitable, but our clients are contractors who never get paid on time because they are larger projects. Although the commercial division is more profitable overall, the cash flow still comes from the residential division.
C+S: We know that cash flow is the lifeblood of the engineering industry, and if you have that money tied up in accounts receivable you can go down the tube pretty quick. Now, David, as a VP of Sales, a big part of your job is business development. How are you going to use this Inc. 500 designation?
DR: It’s a great accolade and it’s validation. We were founded in 2009 in the thick of a recession. It was a grind to build a great team of people who take ownership of their projects and want to be the best engineer that they could be. Getting this validation now is kind of fun for our clients, the ones that already make up our base that go: “We knew you guys were special, and we’re really glad you got this award.” What this hopefully does is allow us to get into different doors where clients will say: “Oh, you guys are Zenith Engineers. We’ve seen your name on title blocks and other submittals. We see the quality of your work, and we see how responsive you are. We see how you take ownership of a project and actually want to design what we’re used to building versus going in not knowing anything about either the contractor or the client and trying to dictate design.” With this validation people are going to take us more seriously and know we are the fastest growing firm, so we are doing something right.
I always tell our team that we didn’t go into this obsessed with growth. We went into this thinking there is an interesting void, and there’s an element of this being a service industry and people forgetting about the customer service aspect of it. So, this growth is essentially a by-product of all these measures we put into place to ensure these clients are going to get the best experience working with a structural engineer.
I used to run West Coast operations for building manufacturers, and the biggest crux in all these projects was being held up in engineering. Not that the engineer was doing a bad job. It was just being held up, or we weren’t getting what we wanted. And so, I went on a journey to find a new type of engineer that is going to be responsive and flexible to what we need to achieve in the field. And then I met Nikhil and Zenith, and I realized there is something here that nobody else has tried to really form a solid base on—putting the client first.
We talked about residential in the beginning, and that’s what really gave us perspective. Nikhil was talking about this being a very big investment on the homeowner’s part, but this is also possibly their introduction to construction. It’s not like commercial services where it’s one business talking to another. There are a lot of questions and emotions along the way. This is not to knock homeowners, but to say they’ve taught us patience. They’ve taught us that we need to bring a level of sensitivity to our workflow because it’s not just a client. It’s a home. When you have that experience and you’re able to transfer it to a commercial client, it’s a completely different experience, and they usually tell us it’s different. Then they start telling their friends, and that’s how it spread like wildfire. We’re not a marketing company. We’re a hardcore structural engineering firm that wants to take on projects that other engineers thought were too high risk.
NC: Coming back to the same thing, I’ve seen companies who start with residential, servicing homeowners, and then when they grow they stop servicing them. We don’t want to do that because those are the customers that trusted us when we started. That’s why our residential team is a completely separate entity, and we tell them not to worry about profit margins. All we tell them to worry about is customer service because we know, if there is another recession, that’s where our money will come from. People will still be renovating homes, but, instead of homeowners, there will be investors. They are going to be flipping properties, and they are still going to need structural engineering and architecture. That’s exactly where we come in.
C+S: I like that you’re talking about customer service because it’s sometimes a lost art in the engineering industry. But, let’s talk a little bit about yourselves.
NC: It’s been about 10 years since we founded the firm in 2009. It’s been a long and tough journey. In this industry especially, people treat more age as more experience and knowledge. Changing that mindset is difficult, but at Zenith we see our youth as a positive. Our headquarters is in Silicon Valley, so many of our customers are high-tech. They work in high-tech, and they want a firm or company that is high-tech too. We make everything paperless and do online storage. We make use of technology so that everything is documented so when I client calls us for missing project papers two years down the line, we can send them a link. If a client complains, “I signed this contract a month ago and I haven’t received my drawings,” we have a robust CRM process. We track every communication, even a text from a project engineer to a client. All our admin has to do is search the project number and the whole history is right there.
C+S: Let’s go back to how you founded Zenith. There are plenty of people out there who want to hear your story. How did it begin?
NC: I used to work at a startup in New York. At that point, I was ready to start my own company, but I still wanted more experience, so I worked in the Midwest and New York for quite a bit of time. I came back to California for a high ranking position at a large enterprise, but coming from a startup, I hated my life. I was very comfortable, but it did not serve my life’s purpose because I was tied up in a bureaucratic machine. Every little thing I had to get approval for, and I was not used to that side of things. I would want to service a client and had the tools, but I needed approval that would take 15 or 20 days.
At that point, I said I’ve been thinking about this for a long time, and I spoke with my business partner who is now our CTO, Senthil Puliyadi. He’s an engineer’s engineer. I have a Master’s in Structural Engineering, but I chose my career path more into operations and construction management. That means I come from more of a management background and I understand how to scale up small businesses. That’s something that a lot of people lack these days. This is where we jive together because he can take care of all the technical aspects and I can focus on the business side. This makes us a good team.
C+S: You are still a small company. You still have a long way to go. You’re out on the West Coast with a lot of big firms. Looking at your business development and marketing looking forward, what’s the plan to continue the growth trajectory you’re on right now with a predicted bear market coming up?
DR: In a sea of sharks, we’re a school of dolphins. We have agility and adaptability in the team we’ve built so far. It goes back to the four divisions we serve. Residential taught us patience. A regular engineer will design the building, but they don’t actually design the construction methods to go it up. We do that, and it taught us construction phasing as well as the overall lifecycle of a project—how multiple designers and engineers could impact each other negatively to affect the builder’s deadlines. This taught us to look at things not from scratch and how we can deal with something that is already existing.
We are now positioned to have the experience that no other engineer has, and the patience to deal with owners and changes. We aren’t thrown for a loop. We can deal with that. Then we have the construction phasing knowledge to understand how this building is going to go up quickly with the most economical materials and labor. And then, of course on the seismic stuff we are creative, so we can come up with solutions on the fly. It’s an incredible future we’re positioned for.
C+S: How does all this fit into your company culture?
NC: We are very ownership driven. It’s not the owners who drive them to work though. Each of our employees, whether it be admin or accounting or engineering or sales, takes ownership of their tasks or projects. We make sure our hiring process is so robust that a person coming in shares our ambition and has the same passion.
Also, we take care of our team members or employees. Like you mentioned, we are a small business, so we are also like a small family. We have just about 30 employees. Our employees stick around with us, and they are making the best salaries the industry has to offer. Also, like you mentioned, we have youth on our side. Our company has the youngest engineering managers because we rate performance by talent.
We are not aiming for the next family-owned company. We are aiming for the next public company. We don’t want to create just a family business. That’s when I decided that every employee of Zenith gets an equal opportunity if they perform well and if they are talented. Last year was the first year where an employee who started as a junior project engineer got inducted as a partner. These kinds of opportunities are very unheard of, and are very unconventional in a conventional industry. That’s where we want to take Zenith. It’s an employee owned company, not a family-owned one, and we respect talent and we want to retain the most talented individuals.
C+S: In the future, do you want to stay in California, or do you want to grow geographically?
DR: We’re based in California now, but we still have the ability to work in every state across the country as well as Canada and other places internationally. But we want that physical presence. We have a strategy now for next year to grow into Seattle, Las Vegas, and San Diego. That will let us cover a little more of Southern California, Nevada, and Washington. We have one, two, and five-year plans for the future, and we have the personnel to help manage it and the leadership to execute.