If many great American companies start in someone’s basement, then Applied Flow Technology’s humble beginnings were its first sign of success.

In 1993, Trey Walters left a lucrative position designing rockets for an aerospace company in Ohio to start his own business in his basement. More than 20 years later, the software company has an international reach — from Brazil to Canada, from India to China.

“More than half our business is from outside the United States,” Walters said. “We sell our software around the globe. Our business in China pays for two engineers here in Colorado Springs; our business in India pays for one engineer here.”

Applied Flow Technology is a software company that specializes in virtual design solutions for liquid and gas pipes. Now headquartered in Colorado Springs, the company is one of the largest in its niche.

Customers include Chrysler-Fiat, Disney and Virgin Galactic.

“We’ve really benefited from the sustainable energy movement,” Walters said. “We have clients who are building fueling stations for compressed natural gas. China is building hundreds of power plants. We’re providing software for companies to be more sustainable, more efficient.”

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Essentially, AFT creates software that allows engineers working on pipe projects to determine what the design will look like before the project gets off the ground by creating a computational version of the project. After the project is finished, the company can use the software to troubleshoot problems along the pipeline, Walters said.

Early days

Now wildly successful — Walters estimates the company doubles in size and customers every five years — AFT didn’t take off immediately. But its success was no surprise to its owner.

“I thought it would take five years, not 20,” he said. “But in hindsight, it’s better that the growth was slower. It allowed it to be more manageable.”

In the early stages, Walters was the sole employee. He wrote the software, sold it and provided customer service, troubleshooting and training to clients.

“I knew that 90 percent of tech companies fail,” he said. “I had a 1-in-10 chance for success. For two years, I only took Christmas Day off. The success came from sheer terror. I was married, I had two kids and I had to keep a roof over their heads. I had to make it work.”

And he did. Two years after he started, the company hired its first employee and then moved to Colorado Springs in 1996, a deliberate decision to move to a family-oriented community, he says.

Lessons learned

But the success of the small firm — Disney’s newest park in Shanghai is using the software — didn’t come without some hard lessons, he said.

“First, you have to realize that you have to keep costs down,” he said. “Buy second-hand office furniture; work out of your house. Keep your costs below what you bring in. It sounds simple, but it sinks a lot of companies.”

The second lesson came much harder: Be careful whom you bring into the company.

“I’ve had five minority owners in the company over the years,” he said. “One is still here, and three were bought out and left very happy with the arrangement. One was a longtime friend, and he had different ideas. When he left, it ruined the friendship. I wish I had done that differently — the ownership piece. You have to be careful because you don’t want to choose between your business and your friend.”

Corporate culture

Now with a settled firm, Walters knows how he wants to run his business and work with his clients.

He has 35 partners around the globe who sell and manage the software in their countries.

Not only does he host training classes in the Springs four times a year for businesses using the software, he also invites his partners to town once a year to go whitewater rafting, visit the summit of Pikes Peak and have dinner at the Mining Exchange.

“They come because it’s fun, but we can also do some troubleshooting and talk business,” he said. “It’s the best way to do business.”

Walters also brings a sense of fun to AFT’s internal operations. A big Disney fan, Walters created an award with Mickey as the wizard in Fantasia. It’s given every two weeks to the employee with the best idea. That led employees to come up with an award with Buzz Lightyear, given for hard work. And finally, another employee came up with the Mike Wazowski (from Monsters Inc.) trophy for the best “scarer,” the person who dealt with a difficult client in an effective way.

“We award them at the staff meetings, and they get to keep the awards on their desk,” he said. “Then the winners are responsible for handing out the awards at the next staff meeting. It keeps people talking, keeps them collaborating, lets them know that the management wants their ideas.”

Walters says he wants to create a fun work environment.

“So many employees feel like their ideas aren’t welcome,” he said. “We don’t want that here. We invite creative ideas.”