September 2010 Archives

When I arrived at German Seeds (before it became Grimes Seeds), it was still in Smethport, PA.  Ronnie German operated the seed company out of his home, but when the business was sold, Gary Grimes moved it into some very nice leased space on the second floor of a brick building on the main street of Smethport.  My job was to become the in-house seedsman --- the industry term for the purchasing person --- so that Ronnie could actually retire.  There was also the precedent and expectation that a seedsman would be the in-house technical expert, especially with regard to variety selection and differences.  Self-Sufficient Seeds had taught me about the vegetable seed world, but at the time I knew little to nothing about the flower seed side of the industry.  This was my chance to learn something new. 

When German Seeds was acquired, it was a modest-sized regional wholesale seed business, selling seed to greenhouses in PA, NY, and OH who grew bedding plants for their local spring markets.  Gary's dream was to turn the old regional business into one with a national distribution.  The depth and breadth of Grimes' experience in marketing, advertising and sales combined with his non-stop drive made this possible, and I had the pleasure of working at his side through the early hard-driving fast-growth years.  I am now convinced that what I learned at Grimes made me the businessperson that I now am. 

When I joined Grimes, revenues were $X.  When I left five years later, revenues had grown to almost $10X.  I'm proud to have been part of Grimes during those growth years, and although I played a small role in that growth with my variety selection and catalog writing, I learned a tremendous amount. 

In 1989, I left Grimes to return to Penn State and complete the PhD program I had left in 1980.  Thanks to the support and flexibility of my campus mentors, Dr. Ralph Mumma and Dr. Richard Craig, I was able to work off-campus while working on-campus on my research.  One of Dr. Mumma's former grad students had started a small commercial analytical lab --- Centre Analytical Labortories --- a few years earlier.  Centre Analytical needed someone to help grow the business, and what I had learned with Grimes was essentially the same skill set. 

When I joined Centre, I was the second employee (in addition to the founder and his wife).  My job was to do whatever was necessary to make the business grow.  In the early years, this was mostly to find work --- traditional start-up business development (i.e., sales).  Oh, and I was pursuing my PhD on-campus on a full-time basis, too.

By 1993, I had successfully completed my PhD, and Centre Analytical had ca. 35 full-time employees.  Revenues had grown from $Z in 1989 to $35Z in 1993.  I can take credit for developing the growth of Centre, but ... I conducted none of the actual analytical chemistry.  In those early years, we were a very close-knit team.  My job was to find the work; the folks in the lab were responsible for getting it done.  It was a system that worked very well for us. 

Much of the work we were doing during those years was contract research in support of new crop protection chemicals (pesticides) being developed.  Because of the demands of the regulatory agencies around the world for more information on the various aspects of potential toxicity of these new chemicals, the workload required far exceeded internal industry capacities, and the industry embraced outsourcing as a solution to the problem.  Centre Analytical became a provider of outsourced analytical chemistry services, and for a number of years, was among the best in the industry. 

During the 1990s, Monsanto began to develop crop plants which were resistant to its flagship herbicide glyphosate (RoundUp).  Soybeans were the first GMO agronomic crop to be approved in the US, and by 1998, RoundUp-resistant soybeans captured the majority of US acreage.  The impact of this market change on the global crop protection chemical market was dramatic.  Glyphosate became the dominant herbicide in use on soybeans in the US, and sales of other herbicides registered for use on soybeans plummeted.  By the end of 1999, most of the crop protection companies which had been developing new herbicides stopped these R&D projects almost entirely.  All because of the success of glyphosate and RoundUpReady crops. 

During the height of Centre Analytical's success, we tried to avoid having too many eggs in one basket.  We were quite proud of our success in that we worked with most of the major crop protection companies, and actually felt that our "client diversity" was one of our strengths.  Until 1999, when the entire crop protection chemical industry responded to the success of RoundUpReady soybeans and glyphosate by temporarily shelving their herbicide R&D programs.  We saw the change coming, and attempted to diversify our service offerings, but we were still 80% crop protection until the end of 1999. 

Between Christmas 1999 and New Year's 2000, everything changed.  When everyone returned to work on January 2, the phone started ringing: "Put this project on hold."  Within weeks, our projected activity for 2000 in crop protection support slid from $Y to about $0.5Y.  We went from strong profitability to running deeply in the red, and not being able to make payroll.  The owner and founder of the laboratory had deeply leveraged the business during its successful years, and we now found ourselves strangled by the debt.  He decided that his only solution was to get out, and making that work became my problem to resolve. 

How do you sell a business that is failing?  How do you retain any of the value that you worked so hard to establish when you are falling off the edge of an abyss?  I spoke with trusted advisors and business brokers.  No one saw any viable solution other than bankruptcy.  And unfortunately, that was not an acceptable solution, either. 

So the lab's first employee and I decided that we would buy the business; attempt to re-position it in the market; and if successful, preserve as much of the founder's investment as possible.  After many arduous months of negotiating with the founder's lenders and creditors, we were finally able to get those creditors to agree to let the new business assume the debts of the old business, and to begin the challenge of doing a classic business turn-around. 

The hows and whys of doing a turn-around are far too complex for this blog.  However ...

In 2001, Centre Analytical Labs became Exygen Research.  We developed a protectable name that we could brand.  We re-positioned our high-end crop protection contract research lab into a pharmaceutical research lab.  We shrunk staff and expenses to just under profitability, and then grew from there to profitability. 

Five years later, Exygen had twice the revenue of Centre Analytical at its highest, and even better profitabilities.  And then ...

We realized that it was 1999 all over again --- we had grown ourselves into an unsustainable position.  We recognized that in order to continue to grow, we needed more and more sales.  Our primary competition was no longer other small to mid-sized contract labs.  We were competing more and more with large full-service contract organizations, shops which did everything from rear the experimental animals, to conducting and analyzing the eventual clinical trials.  Competing at this higher level meant becoming one of those large full-service contract shops.

We had just paid off the remainder of the Centre Analytical debt.  Neither of us wanted to go down that highly-leveraged path again, since we had seen up close and personal how dangerous that can be.  So ... the best solution was to look for a good partner who needed to acquire a high-end high-service analytical division.  

With the help of some very good investment bankers and M&A attorneys, we did just that.  Exygen was sold in September 2006 to a much larger contract toxicology shop which needed our analytical experience and expertise.  My original plan was to work with the new owners for 2 or more years while GardenGenetics got off the ground.  But as in many acquisitions, the cultural changes between old and new was more than I was comfortable with. 

I left the analytical laboratory business in the summer of 2007, and for the first time, could apply myself 100% to plant breeding and genetics. 

More next time. 

I grew up in SW PA, the second son in a second-generation immigrant family.  My dad's father came to the US in the 1900s from Casal Guidi, Italy (Tuscany, 25 or 30 mi west of Florence).  My mother's parents were both of Rusyn ("Slovak", as they described it) descent, and came from a village (Maly Rakovec, at least in some spellings) in what is now the Ukraine.  Both families came to SW PA in order to work in the coal mines and the steel mills.

My grandparents and parents were gardeners because that's what you needed to do to feed your family.  Both food preservation and seed-saving were an integral parts of that culture.  Basements in the fall were lined with jars of canned fruits and vegetables.  I grew up seeing trays of beans drying in the barn; tomato seeds drying on newsprint (pre-paper towels); pepper and cabbage seeds in jars.  Both families grew garlic and multiplier onions year-to-year.  Both grandmothers collected flower seeds and stored them from season to season in used postal envelopes.  Gallon glass bottles (usually from vinegar, sometimes wine) were used as cloches, after with the bottoms were taken off with burning string and cold water.  Softwood cuttings of things like roses were rooted under the glass cloches.  The cloches were also used as frost protection in the spring, but newspaper hats were more commonly used for frost protection --- there were rarely enough glass bottles on hand to cover an entire planting of tomatoes and peppers in early May. 

When I graduated from high school, I didn't have a clue what I wanted to do with my life, but I was absolutely sure that I didn't want to work in a coal mine or a steel mill.  So, with the help of a $5,000 scholarship from what was then West Penn Power (where my father worked), I came to Penn State.  Four years later, I had a BS in biology, and was teaching science and biology in a rural junior-senior high school in a rural school district (Cowanesque Valley) in Tioga County, PA.  And by the way, that $5K scholarship paid for all of my tuition and room / board at Penn State --- for all four years. 

As my wife and I began our life together, of course we gardened.  Of course, we canned and froze fruits and vegetables.  That's how we were raised.  I stumbled across a grassroots organization that wanted to "save old varieties of vegetable seeds" in 1976 or 1977.  This group, founded by Kent Whealy, soon became known as the Seed Savers Exchange (SSE).  I joined and very quickly began to see a need for simple useful information about keeping seed strains true-to-type in the backyard.  I had developed an interest in genetics as an undergrad, and began to try and help out the members of the SSE do a better job of saving pure seed strains.  This ignited a passion in me for plant breeding, and particularly for the varieties that came into the US with the immigrants, what are now known as "heirloom varieties." 

I soon found myself in over my head.  Keeping some seed strains pure was relatively easy, but others were not so simple.  Did I need to grow 2 plants, or 20?  Could I save seed from more than one variety of the same vegetable in the same year?  What about natural pollinators in my garden?  I decided that I needed to know more, and decided to go to grad school, and get trained in plant breeding. 

I started working with Dr. Ed Tigchelaar at Purdue in 1978.  Ed was working the tomato ripening mutants, nor (non-ripening) and rin (ripening inhibitor).  The goal, including my small grad student piece of it, was to study how these ripening mutants might be used to slow down fruit ripening, so that tomatoes could be harvested red-ripe from the vine, yet still have a relatively long shelf-life in the supermarket.  Tigchelaar's work in the mid-70s was among the first to show that F1s (heterozygotes) of these ripening mutants would ripen almost normally, but at about half the normal pace.  Working at Purdue was wonderful for me as a breeder-in-development because there were so many projects going.  When we weren't working in the tomato fields, we were occasionally sent to help with field pollinations on muskmelons and watermelons.  Disease-resistant apple and pear breeding under Jules Janick was in full swing, and each fall that I was there, the grad students got to participate in apple taste tests on the PRI Co-op varieties being developed.  And there were many tomato projects running in addition to the ripening mutant work. 

I completed my MS with Tigchelaar in 1980 and returned to central PA to work on a PhD with Dr. Jack Shannon at Penn State, working on the biochemistry on sweet corn starch mutants.  I've always been interested in how plants made chemicals, from flavors and fragrances, to pigments, to defensive chemicals.  I continued to advise Kent Whealy and the SSE in seed svaing techniques, and decided that there might be a need for a seed company focused on heirloom varieties and varieties developed for small farms and home gardens.  This was in 1981.  The word "heirloom" had just started being applied to vegetables, and Rob Johnston of Johnny's Seeds in Maine was really the only commercial seed company at the time even looking at "heirlooms".  So I put my PhD on hold, and left campus to start a seed company, Self Sufficient Seeds. 

Unfortunately, I was not (then) a businessperson, and had to learn by the failure of my first company.  We simply couldn't grow SSS fast enough to survive, and in 1984, I went to work for Gary Grimes who had just purchased H. G. German Seeds from its founder, Ronnie German. 

More next time. 

When Mike and I started G2, one of the things on the "immediate" list was some sort of marker-assisted breeding project.  The problem was that setting up a molecular marker lab is relatively expensive, and starting a breeding company was already going to take all of our energies.  How could we possibly consider doing both?  Well ...public domain PCR marker sequences exist for many loci coding for disease-resistance (DR) in tomatoes.  All of the common DR loci are available --- VFNTA as well as the spotted wilt virus (Sw-5), a problem disease in the southeastern US.  More, I did my MS in plant breeding with a tomato breeder at Purdue, the late Dr. Ed Tigchelaar. 

One of our academic colleagues --- Dr. Rick Vierling (a soybean breeder at Purdue, and head of the genetics lab at the Indiana Crop Improvement Association) --- expressed an interest in working with us to convert those PCR markers to SNPs (single-nucleotide polymorphisms) and then screen for multiple DR loci in a multiplexed SNP-based microarray assay.  For those of you out there who aren't molecular geneticists, what Vierling's team did was to combine 7 or 8 assays into a single assay.  We could now quickly screen tomato seedlings for DR alleles, and thus only evaluate segregating populations in the field that we already knew were DR --- resistant to most of the common tomato diseases. 

So, we started a tomato project to combine the best commercial and public domain sources of DR with the best commercially-adapted varieties having appropriate horticultural type --- including good flavor in most environments --- with the best-tasting heirloom tomatoes.  If you grow heirloom tomatoes, you know that they are generally a challenge to produce because they lack disease-resistance.  This may be acceptable to a backyard gardener, but severely limits the commercial production of heirlooms.  Our goal was to produce DR F1 hybrid tomatoes which have an heirloom tomato flavor and texture. 

How did we do?  The assay development results can be viewed here: http://tgc.ifas.ufl.edu/2009/Shi%20SNP%20Multiplex.pdf  This is a PDFed Powerpoint presentation by Dr. Ainong Shi, who was the lead scientist working in Vierling's lab at the time. 

All of this occurred within 2 years of the project start.  Two years after that, we are now beginning to make experimental hybrids between G2 inbreds.  We have tomato inbreds in developement which look and taste like heirlooms, but which include multiple DRs --- V, F, N, T, A, Sw-5.  Not all of our inbreds are resistant to every one of these diseases --- we didn't get that lucky on our first try!  However, the ones which we will continue to develop contain at least 3 DR loci.  We continuing to inbreed and refine, and to evaluate both F1s and inbreds for taste, quality, and commercial produce-ability.  This summer will see the first of those hybrids in the field, but it is a late planting. 

The real tests begin in the summer of 2011.