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2000 Small Business profiles
Monday, March 13, 2000
by Tyrone Beason
Michael Banfield likes to think of his pest-control company, SpringStar, as a virtual business. And arriving at the entrance to his home office outside Woodinville, it's easy to see why.
There's virtually no sign that a business exists here. Banfield's work space -- a couple of desks, a fax machine, a PC and some file cabinets -- is confined mostly to his garage.
"We're about as small as they come," Banfield says of SpringStar, which has gone through several incarnations since he founded the company as Agro-Biotech in 1992.
The company mainly sells a line of 17 nontoxic bug traps individually tailored to a who's who of entomology's most wanted, including fleas, fruit flies, flour moths, silva flies and cockroaches.
It wasn't always such a small operation. And the stops and starts that have defined SpringStar's evolution can be seen as a reflection of the risks involved with starting a biotechnology businesses.
Banfield and his wife, Jane, came up with the product line for Agro-Biotech after hearing about a Canadian research team's work with a bacterial chemical that appeared to kill harmful fungi.
The Banfields purchased the rights to the technology in hopes of incorporating it into a fungicide, and they sought investors, including several associates from Michael Banfield's days on the board of a Northwest venture-capital association.
It was natural for Banfield to turn to those he knew.
"The secret is nobody gives money to people they don't know," Banfield says. "He needs to have confidence in you, and you can't get confidence in an individual from reading a business plan."
With a combination of venture capital, money from individual investors, savings and earnings from the sale of stock, Banfield raised about $250,000 to start the company. The goal was to raise as much as $5 million to push the fungicide through the research stage, but that plan short-circuited because the laboratory project failed to produce strong results quickly enough to keep the investors on board, Banfield said.
It seemed like fate. The company's other revenue was coming from sales of an electronic flea trap so promising that Banfield was able to license it to the Hartz pet-supply company, greatly expanding its sales potential.
Agro-Biotech essentially became a contractor for Hartz, earning more than $1 million a year from royalties based on sales. The fungicide project was dropped.
But three years ago, Hartz developed its own flea trap, one that Banfield describes as very similar to his own. Suddenly, his trap wasn't needed. Agro-Biotech laid off its 20 employees.
Banfield said a costly legal battle against a major corporation wasn't worth the effort back then, but he's still considering suing Hartz.
The experience, he says, "pretty much killed the company."
Again, Banfield had to rethink his strategy. This time he pinned his hopes on the cardboard traps. Aside from being less costly to produce, they are his specialty, he said.
The traps are based on a simple design by Banfield, who says he is interested in environmentally safe consumer goods.
Each trap contains a "lure," a little strip that Banfield douses with a concoction containing natural chemicals that insects secrete to attract mates. The traps are coated with a special adhesive that leads all comers to a sticky death.
The personal computer is Banfield's laboratory. He uses three-dimensional imaging software to study and design new chemical compounds for his traps.
Banfield uses private contractors to manufacture the components of his products. SpringStar primarily takes orders from pet-supply and home-and-garden retailers and general-merchandise catalogs. Many orders are taken over the Internet.
All the final packaging and shipping happens in Banfield's home and at a 900-square-foot inventory warehouse in Woodinville.
Banfield has learned that corporate partners, contractors and suppliers must be chosen wisely. Business relies on good faith.
"Any contract can be broken," Banfield said. "You need to have other leverage besides the contract," such as other products to fall back on in case one fails.
But it's also important not to overextend the business.
SpringStar, which took that name after its relationship with Hartz ended, used to be located with another business in Kent, and the product line briefly included pet and garden supplies, such as pet wash tubs and food bins.
But last year, Banfield decided to focus on his core technology on a simpler scale.
Banfield would not disclose the most recent financial details of the company, but said sales last year were under $1 million but growing.
SpringStar has one employee besides Banfield and his wife, and the company contracts with a dozen sales representatives who work on commission.
In this case, smaller is better, and the narrower cyber-business strategy seems to be working, Banfield said.
"It's manageable for the size of the company as we are now."
Tyrone Beason's phone message number is 206-464-2251. His e-mail address is email@example.com.
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