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use as sources of energy.
<br />Walker also faces obstacles when it comes to his ambitious
<br />plans for a completely biomass-fueled, inregrated home-heating
<br />system. He will have to convince consumers to convert to a new
<br />furnace system when homes' entire utilities systems currently are
<br />set up to burn fossil fuels. Walker recognizes consumers are
<br />reluctant to change.
<br />"That's why our furnaces will also burn propane or natural gas
<br />so it bridges our plan," he explains. "We call it a'fossi] fuel crutch.'
<br />Consumers want to save money, but they want to be sure we can
<br />get the fuel to them. They dolt want to burn the bridge until we
<br />prove chat we can deliver, which we believe we will do in the next
<br />couple of years. Once we demonstrate that we can do ic, we will
<br />remove the barrier to conversion and build their confidence level.
<br />"Switching over sounds huge," says Walker about changing fur-
<br />nace systems, but he adds that it won't happen overnight "It may
<br />take two years, five years, 10 years. Just because big ideas are
<br />ambitious, you still have to get started somewhere. We only have
<br />to build one furnace at a time, and as it gets bigger we'll put
<br />together a licensing siruation for other states that follows our
<br />plan."
<br />Paying for such a large venture is another issue. Walker plans
<br />co do an initial public offering, or IPO, to raise money co help take
<br />his company to the next level. (Walker won't discuss the IPQ, cit-
<br />ing SEC restrictions). Meanwhile, Walker testified before Con-
<br />gress in June on the importance of public and private money to
<br />support fossil fuel independence through renewable sources such
<br />as biofuels.
<br />While testifying he said, "I can tell you from experience that
<br />the biggest impediment to any entrepreneur's success is under-
<br />capita]izadon." Walker urged the committee, Congress and the
<br />Bush administration to continue exploring new ways in which the
<br />private sector can form partnerships with the federal government
<br />to advance the nation's gnat of complete energy independence.
<br />Despite challenges, Walker is confident in Bixb}''s business plan
<br />and acknowledges that Select Comfort also faced obstacles before
<br />becoming successful. Every compan}; he says, goes through a
<br />learning process. Also, most would agree that there's more to
<br />building a successful business than inventing a good product,
<br />such as quality control, manufacturing issues and marketing.
<br />For example, Walker says Select Comfort initially sold mat-
<br />tresses through direct-response marketing on TV and in maga-
<br />zines and newspapers instead of retail stores. The company began
<br />co realize that "in the real world, only a certain amount of people
<br />respond to magazine ads," he says. Execs recognized that shop-
<br />persneeded to roach the mattresses and try them out before buy-
<br />ing.
<br />So Select Comfort launched plans for rapid growth and rolled
<br />out lots of stores. And while sales did increase, they weren't even
<br />close enough to offset the expenses of the expansion, and Select
<br />Comfort lost money
<br />Business experts say Selett Comfort had not designed an effec-
<br />tive advertising campaign to create interest in the unusual air-
<br />filled bed mattresses, which would bring shoppers to the stores.
<br />While the company quickly opened new scores, most of the
<br />advertising budget continued to go toward direct-marketing sales.
<br />Also, ads targeted people suffering from back pain rather Chan
<br />the much broader audience of people who just wanted to have a
<br />better night's sleep.
<br />Under CEO Bill McLaughlin, who joined Select Comfort in
<br />2000, the company developed a new advemsing program -the
<br />"Sleep Number" campaign -which effectively drew customers
<br />co its stores, and sales began to boom.
<br />"Every company goes through challenges and the key is to have
<br />the gars and fortitude to ride through it," Walker says.
<br />Walker details his plan for Bixby to became more
<br />than a manufacturer of corn-burning stoves. He's working on
<br />plans ro construct an integrated home-hearing system fearuring a
<br />furnace that can burn biomass`fue] pellets made from agricultur-
<br />al, animal and human waste, and these pellets would be delivered
<br />directly to consumers' homes.
<br />"We intend to come out with a furnace in two years chat can
<br />heat your home, heat your hot water, air condition your house
<br />and generate electricity - al] using biomass pellets," he says.
<br />"Our corn-burning stove is a stepping stone.lt allows us co prove
<br />our concept works."
<br />Walker received a grant from the nonprofit Agriculrural Uti-
<br />lization Research Institute (AURI) in Waseca, which helped
<br />Bixby identify and test a wide variety of agricultural products
<br />chat could be pelleted as fuel. AURI commends Bixby's efforts.
<br />"AURI supports the idea ofusing agricultural commodioes and
<br />co-products as fuel sources as a way to add value to Minnesota
<br />products," says Alan Doering, AURI associate scientist "The way
<br />Bixby is doing that is by building a furnace that can efficiently
<br />burn biomass produtts. Plus, if the company continues co grow, it
<br />will add jobs to the community, providing economic develop-
<br />ment" These factors, Doering says, were aaractive to AURI.
<br />With AURI's help, Walker says he has figured out how ro mix
<br />different biomass materials, each with different burn characteris-
<br />tics -such as almond shells, cranberry husks, grape leaves and
<br />tobacco waste- into a single pellet that burns consistently at the
<br />same temperature. That had always been a huge obstacle, Walk-
<br />er says, adding that while some materials may burn at 300
<br />degrees, others burn at 700 degrees. He has figured out how to
<br />change the burn rate.
<br />"That was our eureka moment," Walker says, adding that there
<br />are 10,000 different biomass materials in the Unfired States alone.
<br />"We can take all 10,000, and with our technology we have the
<br />ability to harness biomass into a single pellet We've taken the
<br />stuff that everybody in this country wants m get rid of and figured
<br />out a way to replace oil."
<br />The next big challenge was figuring out how Bixby would
<br />deliver the petlers to customers. `Any rime you have a new prod-
<br />uct, there are three questions to ask," Walker says. "Who is my
<br />customer? Why do they want to buy my product, and how do I
<br />get my product to them? And [hats the most important
<br />"At first, we though[ we'd have to build trucks that would run
<br />all over the state and lose money like mad until we got enough
<br />customers to support the delivery system." he says.
<br />www.upsizemag.com
<br />SEPTEMBER 2006 UPSIZE 39
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