Meet Rick Grazzini, part 2 (pre-GardenGenetics)

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. 

lab stuff web.JPGMuch 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. 

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This page contains a single entry by graz published on September 27, 2010 6:32 PM.

Meet Rick Grazzini, part 1 (early years) was the previous entry in this blog.

Meet Rick Grazzini, part 3, GardenGenetics is the next entry in this blog.

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