Compost kings: Science and sales at fast-growing Holganix
In Glen Mills, Pa.
(Blog post) When he was 12, Barrett Ersek wanted a motorcycle. Get a job, said Ersek's Dad, a teacher and wrestling coach at Garnet Valley High School, who was trying to put three older kids through college. "He said, 'You can have anything you want, you just have to work hard and save your money,'" said Ersek.
So he did: 30 years later, Ersek is co-owner, with self-taught scientist Stephen Lange, of Holganix -- as in 'holistic organics' -- a Glen Mills-based company that made and sold more than $4 million worth of chilled organic compost starter in the past year, to clients like the Pittsburgh Steelers and the U.S. Naval Academy.
But Dad's advice was tough to follow, in the beginning: "Nobody was hiring 12-ykiear-olds." Ersek saw Tru-Green (now part of ChemLawn) was running relentless ads for jobs starting at $4 an hour, above minimum wage. "It seemed like a lot of money to me. I put on my skinny leather tie and went in to apply."
They told him he needed to grow up and get working papers. "I said, 'I'm coming back every day til you gimme a job.'" G.V. principal Andy Rumford pointed out he could get a farm working paper at 12 (they all assumed he'd be cutting grass, and that's agricultural, right?) Ersek took his working paper back to Tru-Green, and they hired him. But not to manage grass: "Turned out it was telemarketing. Cold calling guys to sell lawncare. It's a boiler room call center. Sitting next to pretty girls." He was hooked.
Ersek's voice hadn't changed yet. "So that day I became Kimberly Ann. With a Southern accent. For two years." He sold a lot of fertilizing. At 16, old enough to drive, he started live sales calls. He won a top-10 Tru-Green sales award for the mid-Atlantic states. "I figured I was as good as the 40-year-olds. They weren't as motivated."
So he quit, and started his own lawn-care group. "I went out and told people I'd put down fertilizer, kill dandelions and clover, green their grass. No weeds." Though "I had never actually done that." He burned a few lawns. "I figured it out. I picked some big neighborhoods I wanted to own. I started knocking door to door. Like I was trick-or-treating. I would recruit my friends. They needed money, I'd get em to work hard for a day, they'd come back a week later when they needed more cash."
Then it was time for college, because that's what Erseks did. (His father went on to run A.I. du Pont High School in Delaware, and later served as public school superintendent in Haddonfield.) But Ersek "didn't want to go to college. I wanted to run my business. My dad said, 'So study business.'" He enrolled at Penn State Brandywine. "First day I got a microeconomics class. I was excited. They were going to teach me how to do this! I got to class early. I asked the teacher questions about running a business. She had no idea."
So disappointing! He gave college three weeks, then headed back to his lawn care. By then his girlfriend -- they had started kindergarten together in Garnet Valley -- was pregnant. "So now I gotta get married and start a family."
They had four kids. Ersek legalized his informal service as Custom Care, and expanded in Chester and Delaware Counties. He was still in his 20s, with 20 employees and yearly revenue of $2.2 million, when Scotts Lawn Care offered to buy him out. He took their third offer, for $3 milllion, and signed their local non-compete agreement for three years. And started again, from scratch, outside Baltimore.
This time he was systematic: "I began working on new technology. I figured, how much does it cost to do your lawn, and how much do you spend? The salesman drives out to the house, measures, leaves an estimate, calls you back, that's about $275 in costs, for a $400 a year sale. Took six quarters to get it back. And then you kept the customers maybe five years.
"It was an expensive way to grow a business. That was a stupid bottleneck, having to measure each yard.
"So I got maps. Now this was before Google Maps. We leased maps. Baltimore Metro maps cost $50,000 a year. I got software written, to measure the greenspace on each property, compared to the lawn and driveway. Instant results. Cost us $50 for an estimate, down from $275. All over the phone. We got a patent. I called the company Happy Lawn." When the Scotts non-compete expired after three years, he expanded back to the Philadelphia area, up to Jersey, down to northern Virginia. He built that business to $10 million a year.
He looked at his other costs. "We were putting in a lot of fertilizer," at a time when environmental activists were blaming fertilizer runoff for hurting Chesapeake Bay. Looking around, Ersek found Stephen Lange, a Newark, Del.-based self-taught plant biologist and sometime banker, who had developed an organic compost base while working for MBNA Corp., the giant Delaware credit card bank.
MBNA gave Lange a lab and put him to work: "They wanted an organic footprint. He had an open checkbook to develop this product." Bank of America bought MBNA in 2006 and cut costs. No more staff agronomist. Lange went into the compost business, targeting landscapers and sports fields, and landscapers like Ersek.
The Chesapeake Bay activists were pressuring farmers and lawn care companies to cut back on nitrates, phosphates, sufates. Says Ersek, "Some of that stuff in water makes algae bloom. That hurts crabs and shellfish. I'm an avid striper fisherman. And my customers, they're all reading this stuff, and they ask, is this good for the bay? And regulations are starting to surface that will force us to operate differently."
Lange's Holganix compost starter was a solution, Ersek saw: "It's not a fertilizer, no nitrogen, no phosphorus, no potassium. It's a catalyst. Fertilizer needs to be converted into a form that can be digested by a plant. The product takes all the living matter you find in a compost pile and puts it directly into your soil. The microbiology breaks the leaves down and turns them into a natural nutrient. It makes urban soils, which are mostly not rich in biology, more productive. Like a compost pile."
In 2009 he sold Happy Lawn -- this time to Tru-Green, his first employer -- for a price above its $10 million in yearly sales. And he joined with Lange, who's now Hoganix's vice president of research and development, in his Newark lab, while Ersek runs the Glen Mills office, and also goes on the road maybe three days a week, heading sales and marketing, Maine to Florida to California.
Sales jumped from $750,000 the first full year of operation, to $1.77 million in 2012, and $4.4 million last year. That got Holganix listed among the fastest-growing Philadelphia-are companies in Inc. Magazine's list. At the Glen Mills plant, workers fabricate refrigeration systems (including components you can buy at Home Depot), mixers and sprayers, large chilled lots and bottled dosages of Holganix ready to use.
"Bugs in a jug will run out of oxygen or eat themselves to death," and need careful handling, says Lange. The "compost tea" is a brew of fermented, pasteurized and refrigerated sugars, bacteria, yeast and mediums for keeping it all alive.
Being near Lancaster County with its base of small farms and suppliers is a help. Says Ersek, "We have good Amish and Mennonite customers on the ag side. Our primary customers are in turf -- sod farms, grass (athletic) fields, landscape contractors. The Pittsburgh Pirates are a good customer. Notre Dame, Villanova, Penn. The Cincinnati Reds. Fenway Park in Boston. The Miami Dolphins, Tennessee Titans, Atlanta Braves."
Lange is studying other problems, like South American coffee rust. "My objective is to learn as much about everything as I possibly could in regard to plants, plant biology, physiology, patholigies. Universities can't teach that the way I need to learn it," he told me. "I have ventured on my own, using the resources that are out there, and the library card catalogues, things computers can't seem to find." With Ersek, a born salesman and detail guy, the team is putting its little bugs to work in America's fields.