Practical visionary

Practical visionary

(But first, clean up aisle 9.)

by Neil Orman   There was liquid laundry detergent all over the floor.

The day before Thanksgiving, 2001, Restore Products Inc. of Minneapolis faced one of its worst moments.

The company markets environmentally friendly cleaning products made from biodegradable, nontoxic plant ingredients such as soy, orange, coconut and corn.

It also operates “refill stations” in grocery stores that allow customers to refill their bottles so they don’t end up as waste.

Four years ago, one of these refill stations exploded all over the floor of one of its premier clients, Whole Foods, the day before the biggest shopping day of the year. “They weren’t happy,” recalls Laurie Brown, the firm’s founder and president. “But they didn’t kick me out of the store.”

In fact, since that stressful day the manager of that Whole Foods, located in St. Paul at 30 S. Fairview Ave., has done a testimonial for Restore Products.

The episode epitomizes the firm’s history up to this point. In its four-and-a-half-year existence, it has faced setbacks and challenges, including difficulty raising money and product defects that ticked off customers. However, thanks to the tenacity and persistent optimism of its founder, the company has also made steady progress and overcome challenges, although major ones remain.

In the Whole Foods case, the flood disaster led to significant improvements in the refill station. The old version of the station had seams that leaked. Successive versions were designed with seamless roto-molded parts and a special 25-gallon storage tank to catch any leaks before they hit the floor.

“These learning experiences have been painful, but they’ve led to a better mousetrap,” Brown says.

Brown, 51, has a history of pursuing difficult projects with a goal of “changing the world.” From starting one of the state’s first environmental products stores in 1991 to lobbying for community services for the mentally ill in the 1970s, the small-town native hasn’t been satisfied with a small life.

She’s suffered her share of hard knocks, including the gut-wrenching closure of her store in 1997.

Brown advises other entrepreneurs to “throw your hat over the fence,” because then “you have no choice but to climb the fence and get it.” Her life has epitomized that credo.

Brown grew up in Waseca, a town of 8,000 in southern Minnesota. She developed her love for the environment as a child, when she “literally lived outside.”

“We had a friend with a boat, and we’d water ski probably four or five times a day,” Brown says. “And my parents had a dinner bell, and they’d ring the bell. Then after dinner, it was back outside, playing nighttime games, until the dinner bell rang again.”

When she wanted to be alone, she’d sit in a tree she called the “airplane tree.”

“The way I dealt with stress was go sit in this tree that hung precariously over a lake, and I saw a beautiful view of nature,” she says.

It seemed her destiny to start a business, given her family’s long legacy of entrepreneurship. Her maternal great-grandfather ran two dry goods stores, while her paternal great-grandfather started the New Richland Star, a newspaper. Her maternal grandfather owned an electric service business. Her paternal grandfather started another newspaper, the Waseca Daily Journal, while her paternal grandmother ran a cafe. Her father owned a printing company, and her mother ran an interior design firm.

Brown, who has two brothers and a sister, was intrigued by business early on, but also gravitated to social causes — two drives she would eventually fuse by founding environmentally friendly businesses.

She went to Macalester College in St. Paul and double-majored in political science and psychology, in order to “change the world one behavior at a time,” she says.

In her senior year, Brown helped found an organization called the Mental Health Advocacy Coalition (now called the Alliance for the Mentally Ill), which lobbied for social services for the mentally ill. Brown has a brother afflicted with schizophrenia, and both she and her dad worked on the effort.

“It was very cause-related, both personal and social,” she says. “They asked me to be their lobbyist, even though I’d never lobbied before in my life. I wasn’t afraid to try something I knew nothing about.”

Beginning in 1975, she continued lobbying for mental health services for six years.

Mila Amundson, a therapist and entrepreneur who worked with Brown, calls her a “dynamo” and a “visionary.”

“She pursues visions, and does whatever it takes to achieve them,” says Amundson, who is co-owner of Outreach Counseling & Consulting Services in Shoreview.

Brown helped push through some key legislative changes, including establishing standards mental health facilities had to meet to get state money. She also got then-Gov. Al Quie to tour the state’s mental health facilities. To give him a user’s perspective, Quie even checked in as a patient during his tour.

“That was big,” Amundson says. “It’s one thing to read about programs on paper, but quite another to see them.”

Brown got so caught up in lobbying that she didn’t graduate, and had to go back later to finish.

Lobbying showcased Brown’s sales skills, and it was only a matter of time until she entered the business world.

In 1982, she went to work for Centrum Software, a Hopkins-based company that made accounting software. “There again, I didn’t know anything about accounting,” she says.

Three years later, she was recruited away by a rising local competitor called Open Systems (now based in Shakopee), and ended up managing their largest retail account, responsible for a quarter of the firm’s sales.

“What I learned from that experience was retail distribution,” Brown says. “I learned how to sell through distributors, sell private-label accounts and push products through a distribution channel, which is what I’m doing now with retailers.”

From 1986 to 1988, Brown did consulting on political fundraising, and in 1988 ran the unsuccessful U.S. Senate campaign for Independent candidate Polly Mann.

By the end of the 1980s, Brown was anxious to start her own business, and scanned the marketplace for ideas. She wanted to start something about more than just money, and was intrigued by the explosion of environmental products starting to hit the market. Those ranged from compact fluorescent light bulbs and nontoxic paints to water and air filters and shampoos made with environmentally safe ingredients.

“It was all about chemistry, and coming up with products that were safer for the environment and the user,” she says.

She began selling these products on a wholesale basis through dealers, while she researched the concept of opening her own environmental products retail store.

She got a bank loan for $65,000 to help her do that, and in 1991, opened “Restore the Earth” in Uptown at Hennepin Avenue and 22nd Street. It was one of the first environmental stores in the United States, and offered a huge range of products, including organic garden supplies, unbleached cotton sheets and greeting cards made on recycled paper.

“It reminded me of my great-grandfather’s department store,” she said. “We had everything.” Never thinking small, Brown planned to eventually franchise the concept on a national scale. With the help of a chemist she found, she also set out to develop her own line of cleaning products.

Many conventional cleaners contain chlorine, ammonia or potentially dangerous organic solvents. (Don’t get Brown’s customers started on the risks of these products, or you’re in for a long chat.) Her goal was cleaners with nontoxic, renewable ingredients. She developed a range of plant-based cleaning products, including an all-purpose cleaner, a toilet bowl cleaner, a spot remover made with non-toxic enzymes and a “kinder” cleaner, safe for use around children with asthma or allergies.

Her customers, who are obviously passionate about the environment, also praise the products’ effectiveness.

For example, user Meg Anderson likes the dishwashing liquid because it “immediately removes grease and doesn’t dry your hands.” She liked the oven cleaner because it cleans their wood-burning stove quickly and “you don’t have to wear rubber gloves and a gas mask to use it.”

In 1998, Restore Cleaning Products proved the caliber of its products in a test run by the state of Minnesota. Going up against 23 companies, including giants such as Ecolab and 3M, the tiny company ranked No. 1 for safety, performance and environmental attributes.

Operating the store gave Brown a unique opportunity to develop her products with constant, face-to-face customer feedback. She kept a book on the store’s front counter that she jokingly titled “A Thousand Commonly Asked Questions About Cleaning,” which contained customer feedback.

“Every day I’d look at the list, and if there were any new questions, I’d write the answer down,” she says. “This became a strategy of never letting a customer’s comment or question slip through the cracks.”

The store “was like a lab, essentially. They’d say, ‘I tried that spotter, but it left a little residue.’ Then we’d work on that. Or ‘I tried the laundry soap but it left the clothes a little stiff.’ That’s because they were using way too much, so we added pumps to control how much cleaner was dispensed.”

Along with developing the cleaners there, Brown also planted another crucial seed at the store that later grew into Restore Products.

In 1995, she started a program to encourage repeat visits to the store, through which customers could get $1 off a purchase of cleaning products by bringing their bottles back and refilling them there. At this point, there was no refill machine, just big canisters of cleaning fluids from which the store refilled customers’ bottles.

The program “was meant to generate trips,” Brown says. “It was also initiated to increase gross profits, because I made a lot more money on the refill than I did on the pre-fill, because it eliminated the bottle, caps, packaging, etc.”

She was surprised at the customer response.

“Customers came back with these empty bottles in droves,” she says. “It didn’t matter whether they were green or not. If you give the bottle a value, it no longer becomes waste.”

The store itself was struggling, due to increasing competition from big-box retailers. Target, for one, had noticed the growing environmental consciousness of customers, and began stocking some of the same products as Brown.

“Every year we would lose categories to the mainstream retailers,” she says. “For example, we had a monopoly on compact fluorescent light bulbs for a couple of years, until Target picked them up. We could never get the distribution prices Target could. So once something was mainstream, our customers, however loyal, were still price sensitive.”

The store grew to about $360,000 in annual sales by the mid-1990s, but didn’t grow beyond that and was just breaking even. In 1997, Brown was forced to close the store, an experience that left its scars.

“Entrepreneurs don’t wound easily, let’s put it that way,” says Brown, who incurred about $65,000 in personal debt with the store’s failure.

Nevertheless, the experience was valuable. Along with planting the seeds for Restore Products, running the store was a trial by fire that shaped Brown. She became an expert on the environmental market, with a rare firsthand knowledge of users. She became a big believer in writing business plans, developing a new one every year. She also learned the art of bootstrapping, and the pivotal importance of cash flow management.

“You have to be on top of it every minute,” she says. “You make one mistake with cash flow, and you’re done.”

After closing the store, Brown was down but not out. Her knowledge of the natural products market was a major asset, and in 1998 she was hired by Rivertown Trading, a St. Paul-based mail order company specializing in environmental products, to help it create a catalog. She was recruited around the same time that Rivertown Trading’s parent, Minnesota Public Radio, sold the unit to Target Corp. for $120 million.

“It was the same market, and I worked with them to merchandise, write the copy, target market and then execute,” Brown says.

She helped the company develop about 10 versions of the catalog from 1998 to 2000.

The experience helped her get out of debt and nurse her bruised ego. But more importantly, it gave her time to develop an idea brewing since the success of her store’s $1-off program.

Brown wanted to develop a refill station she could use to market her cleaning products to groceries and alternative foods stores. Along with the concept’s environmental benefits, it also provided a way to get into stores where shelf space was at a premium, and deep-pocketed competitors were entrenched.

In 1998, Brown hired a mechanical engineer (another name she won’t disclose) to do a feasibility study. He determined that developing the machine was technically challenging but feasible.

Brown applied for and got a $71,000 grant from the state’s Office of Environmental Assistance. For the next three years, she worked with her engineer to develop a prototype, and incorporated Restore Products Inc. in January 2001.

The system, which is designed like a big kitchen cabinet, is easy to use. It has several shelves for Restore’s products and a refill chamber on the left side. Users just stick their empty bottle in the chamber and close the door. The machine then reads the bar code, dispenses the liquid and spits out a coupon.

Users get a dollar off and their bottles don’t end up in landfills.

“What we’ve been able to do is potentially solve a huge worldwide problem: disposing of waste, and depleting natural resources simply to throw them away,” Brown said. “It’s ludicrous when you think about it.”

Among the early customers was Wedge Co-op, a natural foods store at 2105 Lyndale Avenue South in Minneapolis.

Fern Weiss, the store’s purchasing manager, had been a customer at Brown’s store. She’d been impressed then by Brown’s spirit of customer service, and that was reinforced when Brown came herself to supervise the machine’s installation.

“They showed up at 6 or 7 in the morning,” Weiss says. “She was a little sleepy around the eyes, and you could tell she wasn’t terribly accustomed to being up that early. She could have come later on in the day, but doing that showed me her extreme commitment to the customer.”

Indeed, bending over backwards for customers has helped Brown survive some early challenges. Along with the Whole Foods flood, another example occurred when Wedge Co-op chose to stop selling other bulk cleaners after bringing in Restore’s refill station, a decision that angered some customers.

“I was being bombarded with complaints, and Laurie was just so supportive,” Weiss says. “She offered and actually did come in herself to talk to customers, and explain her vision, and why we chose to put the unit in. I was incredibly impressed with that.”

Despite earning such kudos, Brown has had major challenges with Restore Products, including difficulties raising money and slower growth than she would have liked.

She is tight-lipped about revenue, citing a board policy not allowing her to disclose financial information.

She says Restore Products had “under $2 million” in revenue in 2004. According to previously published reports, the firm projected sales of $147,000 in 2001, around $280,000 in 2002 and around $1 million in 2003 (but those were projections and Brown wouldn’t disclose whether those targets were hit.).

In addition, she’s had to scale down her forecasts for the business repeatedly, which she blames largely on fundraising challenges.

Two years ago, she was forecasting the firm could hit $39 million in revenue and 2,000 stores by 2006, while today she’s forecasting $33 million by 2009 and 35 stores by the end of this year. She’s also projecting the company will turn its first profit in 2007.

Brown has refill stations placed in 19 stores today, including several in mainstream stores: three Festival Foods, one Cub Foods and one Byerly’s.

She has raised about $2 million in equity and debt, including money raised from angels in the Twin Cities and Madison, Wisconsin, areas. One of those angels is Anderson, who along with her husband, David Washburn, invested $100,000 in the firm. She continues to seek additional investment, but declined to give details citing Securities and Exchange Commission rules.

 However, venture investors are tougher to convince than eco-friendly angels, demanding firms prove they have mainstream potential and will reach hundreds of millions in sales.

Brown’s company has begun to achieve major milestones. She secured patents on the refill station in 2003, a requirement for many venture firms; she’s making headway with mainstream groceries; and last December, she landed a crucial deal with a national distributor, Connecticut-based United Natural Foods Inc. (UNFI).

The deal took about a year of painstaking work, and the distributor will take 25 to 30 percent of the gross profit from business it does with Restore Products. However, Brown says those terms are worth it for  the deal’s advantages — namely, national reach.

“Now we’re in Missouri and Chicago and we can service bigger accounts like Whole Foods regionally,” she says.

She hopes to see Restore’s refill stations blanket the country one day. And the refill technology may have applications beyond environmental products.

Eventually, Brown’s persistence and progress might make the difference with a heavy-hitting investor, allowing her to realize those dreams.

“I’ve had investors look at me, and just shake their heads,” she said. “Then I go back to them three years later, and they’re like, ‘Wow, you’ve made a lot of progress. I thought you were crazy.’”

Mary Jeffries, executive vice president of Minnetonka-based Petters Strategic Partners, has done consulting for Brown in a number of areas, including helping her raise money.

Brown’s “technology can be used quite well in a number of areas,” Jeffries said. “That’s a point we emphasize” to potential investors. For her part, Brown sees signs all the time her company is on to something big. A big one appeared in March at an Anaheim, California, trade show, when Restore’s booth showcasing the refill station attracted an unusual crowd.

“I walk in, and there is the top detergent buyer from UNFI, the buyer from Wild Oats Market, the second biggest natural foods market, the buyer from Whole Foods, and the CEO of our largest competitor, all in our booth together, looking at the machine, with their mouths hanging open.” Brown says. “That was the defining moment for me.”

Anderson, like most of Brown’s partners, is passionate about Restore Products’ environmental benefits, but also thinks it can be successful. She emphasized Brown’s sheer persistence, as a key factor that convinced her and Washburn to invest.

“She has really bootstrapped this thing, and been incredibly resourceful in doing so,” Anderson says. “For example, she’s found great people, like the engineer and the chemist, who were passionate about the business, but didn’t have to pay out the wazoo for them. She found some funky warehouse space for the packaging. She just always seems to find a way. Those are the people that make it.”

Her biggest strengths are tenacity and fearlessness. A classic Laurie Brown story, according to friend and customer Paul Steinhauser, occurred when the two of them attended an Al Gore speech in July at the St. Paul RiverCenter.

After the discussion, Brown was determined to speak with the former vice president, but had a lot of competition for his ear.

“There were a thousand people on the floor,” Steinhauser says. “She muscled her way through all of them, and told Al Gore he ought to use plant-based cleaning products.”

[contact] Laurie Brown, Restore Products Inc: 612.331.5977; la****@*************ts.com. Mila Amundson, Outreach Counseling & Consulting Services: 651.481.0637; mg*********@*****st.net. Meg Anderson, Red Cardinal Enterprises: 651.653.1485, me*@*************rm.com. Mary Jeffries, Petters Strategic Partners, 612.867.3114; ma***********@**********up.com. Paul Steinhauser, White Bear Racquet & Swim: 651.426.1308; pa**@***it.com. Fern Weiss, Wedge Co-op: 612.874.7275:**@***ge.coop“> fe**@***ge.coop