The old Quonset hut situated near the I-5 freeway has been a fixture for decades in this southern Oregon town, but the energy level and innovation taking place inside is entirely new.
The Quonset also represents a calculated gamble that not only can manufacturing re-energize this rural Oregon community with good jobs and high return on investment, but that the business within – Roguewood Furniture Company– can compete with venture capital dollars that are most often associated with 21st century technology rather than old-school product making.
Harmony in discord
But don’t tell Elizabeth Bauer this gamble isn’t prudent. Her whole business is built on taking discordant ideas like this one: scaleable investment in rural manufacturing, or like this one: sustainable forest products, and making them not only meaningful, but profitable and of high community value.
Bauer, 37, is the president and founder of Gilded Rogue, an Ashland, Ore. investment company that launched last year. It has since purchased three southern Oregon businesses, including Roguewood and its retro Quonset hut.
“This is a good company that just needed a little bit of love,” she says of Roguewood.
Bauer came out of the grocery industry where she worked as a CFO for massive company with 2,700 employees and annual sales of nearly half a billion dollars. She said her time in corporate finance taught her that many businesses are lacking the language to compete for investment dollars.
“I’d hear all the time,” she says. “There is nothing to invest in. I know it isn’t true but I realized they are speaking different languages.”
Which lead to those seemingly discordant terms being merged together in an old-school business model that can attract cutting-edge investment dollars.
Embracing rural Oregon
“There is a lot of angel money for startups, but not as much for ready-to-scale investment. That’s our sweet spot,” Bauer says. “We’re really about accelerating. We’re trying to get companies out of that first stage and into stage 2 or 3 expansion.”
Bauer said the mission is straightforward and simple. They are looking for companies within the rural Pacific Northwest that have potential sales growth and potential social impact.
Both, she insists, are critical.
“The impact is built into the costs, say, like the wood we use,” she says, because compromising local impact would dissolve the mission. Each company under the Gilded Rogue umbrella must be focused on “benefiting a social issue and making a difference in the world,” according the company’s website.
Building on what works
“The do-good stuff is more than a slogan in the daily operations of Roguewood. It translates in observable ways into the work place, just as when Quin Wilson, a Roguewood furniture designer, returned from a hunt for reclaimed wood. Wilson described the value of the large beams he brought back like trophies of his latest expedition.
I got this out of a saw mill they are tearing down in Klammath Falls,” he said.
He struggled to hold the massive beam—perhaps a 2×12 to an inexpert eye—on its end.
“See how tight that grain is. New timber today may have as much as 1/3 of an inch gap. But this is so much higher quality…” Wilson explained, then segued seamlessly into his plans for converting the beams into a new artisan table.
Wilson plans to smooth out the grain (“just a little, so it’s smooth, but still looks right”) and fill in some holes. On the spot he bought a significant amount of the wood on site and dragged plenty back in his truck.
“How much?” Bauer asked.
“$2.50 a square.”
“Very nice,” she said.
Wilson was also excited about a new wood he’s exploring as a potential product.
“I just found another type of wood I think we might want to take a look at. It is yew wood. It’s a salvage wood. It has a lot of potential,” he reported.
Bauer encouraged him to take a look. No micromanaging here. That freedom, Bauer says later is a big factor in Roguewood’s plan. Bauer, who is now serving as the company’s CEO, is building the business around the craftsmanship and quality that already existed. The employees will be the eventual owners, so autonomy now—with a guiding hand on the business side—is critical. Empowerment is a big part of the growth strategy.
“It’s like putting floaties on a company instead of tossing them into the deep end,” Bauer says.
Based on the early explosive growth under Bauer’s leadership, Roguewood won’t need the floaties for long. The word is out in the community as well. Former employees are returning, applications in hand.
“I shouldn’t have left,” one man says as he quickly dropped off his application.
Inside the Quonset hut energy and activity hums. Different sections are used for making different products. The smell of steel saws burning through hard wood mixes with the noise of machines in high gear. But the relaxed vibe of the work represents more high-school woodworking class than high-pressured manufacturing.
In October Roguewood hit $250,000 in sales and ramped up to 60 employees, up from $120,000 in sales and 17 employees back in July. November sales will hit $350,000, Bauer says.
“We just need to get them out the door,” she says of recent sales.
November will also be the first month of a new strategic partnership with Sawyer Paddles and Oars, which agreed to move its manufacturing into the Roguewood site. Employees will be able to cross-train in both furniture manufacturing and paddles, according to Sawyer President Peter Newport.
“I think Liz is an amazing leader,” Newport says.
The partnership fits with what industry experts say is the future of American manufacturing. John Bova, director, MTN Capital Partners LLC, told Industry Week streamlining is the future of American manufacturing.
“The types of decisions that needed to be made include streamlining of go to market, successful new product introductions from a strong pipeline and steady global business investment. Those will be key characteristics for manufacturers poised for higher growth levels,” Bova said.
Lead with sales
It’s all part of the process Bauer envisioned when she first focused on Roguewood.
“Sales came first,” Bauer says. “Then came the employees. Now we’re connecting all the dots,” said Mariam McVeigh, Roguewood’s director of sales. She shares that the arrival of Bauer and her team has infused the company with creative energy.
McVeigh used her personal connection to an employer at the Wild River Brewing Company to land a new account. Shaun Hoback, manager of the brewing company, said he just signed a contract with Roguewood for new dining room tables and matching décor that includes old photos of the mills in town and new sustainable products made there including Sawyer paddles.
“Those paddles are gorgeous,” Hoback said. “We want to connect first and foremost with local companies. But the story behind the wood, the company, the industry here, all plays a part in why we want to do business with them.”
Bauer also brought in a team of professionals to help Roguewood organize its front office. One of those is Sam Leaber, systems administrator for Gilded Rogue, on loan to Roguewood.
“Companies don’t always know what they need until it all goes wrong,” he says.
By having Leaber available, Roguewood can improve its online presence without the added cost of a full-time IT guy. Bauer’s husband also pops in, helping out with any number of tasks as needed.
“The more we do this kind of stuff,” Bauer says, arms sweeping across the spartan office space, “the more they can do what they do best, building a great product.”
For all the business savvy, the mission remains impact-centered, much like Wilson’s hunt for reclaimed wood and Bauer’s determination to build a solid, permanent workforce. It also is evident in the exit strategy Bauer has in mind, which is to eventually sell the company to the employees themselves.
Because the company was undervalued and is now getting the lift it needed it should soon hit industry standards, Bauer says. That realized growth will allow the employees to buy her out. It means a company will sustain in the community that gave it life and will benefit that community long after Bauer is on to other projects.
Bauer knows profits are critical. But unlike much of the venture capital world that is looking for the explosive dividends of tech companies that require 10 times the amount invested in returns, Bauer says the same return can be realized with a lower rate of growth with fewer failed investments.
“There are a lot of companies out there that don’t fit the 10x model,” Bauer says. “But we sort of put them together to outperform that model. We don’t have the eight in ten failure rate to absorb. It allows us to succeed.”
It also allows them to continue to make an impact, like donating money to the Ashland-based Lomakatsi non-profit that educates children about forest health. For every piece of furniture Roguewood sells, Lomakaski is given money to plant a tree, Bauer says.
Bauer says the company must excel and the impact must be reflected in the product, which “drives money into impact.”
She says the overall aim of the company is connecting the diverse artisan craftsmakers in the Pacific Northwest to the burgeoning market of clients across the globe.
“If we can do wood products right, in a sustainable way, here in Southern Oregon, in timber country, well that’s a great model for everyone,” Bauer says.
A model Bauer is willing to gamble on.