Claudia Raessler considers herself to have stumbled into running her own business. Yet she and her husband Ken haven’t appeared to suffer from the accidental case of entrepreneurialism.
The husband-and-wife team—Claudia is managing director, while Ken is president—own and operate Maine Dye & Textiles (formerly known as Saco River Dyehouse). The business, which got its start dyeing yarn for the hand-knitting market, last year had gross sales just shy of $1 million, but it’s just launched a plan Claudia believes will triple revenue in two years.
Central to that plan is an expansion into the world of high-tech textiles. Claudia and Ken recently invested a couple hundred thousand dollars in new machinery imported from Europe that will allow it to begin offering dyeing services for technical textiles, such as athletic wear and high-end climbing rope like the kind manufactured not far away at Sterling Rope. Though the new machinery only just begun within the last two months dyeing its first batches of textiles, the company is already getting inquiries from potential clients that would require more than double the company’s current capacity.
The new machinery and anticipated growth means Maine Dye & Textiles recently needed to re-locate from the historic Pepperell Mill complex in Biddeford, which Raessler admits was “romantic,” to a larger space in the Saco Industrial Park.
In her interview with Maine Startups Insider, Claudia speaks candidly about the challenges of entrepreneurship, living with bad decisions, and her advice for future entrepreneurs. This interview has been edited for clarity and length.
Maine Startups Insider: What do you consider to be your first entrepreneurial endeavor?
Claudia Raessler: I probably stumbled into entrepreneurship because I didn’t understand the concept. Both Ken and I are older than most people. But my first entrepreneurial experience was probably—and this will tell you my age—was selling my services to iron clothes in high school. I used to go around the neighborhood and be the ironing lady. That was a long time ago. From there I’ve been very traditional. I would not call being a lawyer, which is what I’ve been for the last 35 or so years, very entrepreneurial. It takes a much different skillset.
We started a farm in 2001, and that we turned into an entrepreneurial experience because rather than having the animals walk around and just look at the pasture and thinking of it as a hobby, we ramped that up to be a commercially driven farm, selling and breeding livestock as well as creating an end product from that livestock. And from there we went to the dyehouse.
That was an alpaca farm, right? What was the end product?
Yes. I think like a lot of people that run farms, where the margins are really tight, we did everything from providing boarding services, we did events. What we did was put together in the last four or five years an aggregator model—we bought alpaca fiber from all over the U.S. and turned it into commercial production process to produce yarn. And that was probably where we learned the most about how to interface with textile manufacturing.
We didn’t actually produce the yarn ourselves. What we did was coordinate the supply chain to produce the yarn. So we bought the raw fiber—in agriculture they call it an aggregator model—and coordinated the supply chain that would turn it into primarily hand-knitting yarn to sell through stores or on other farms.
And did you have your own retail brand of yarn?
We did. The farm’s name was SuriPaco and so we sold a line of yarn associated with that farm name. And we were horrible at it.
Why were you horrible at it?
We were horrible at it because running a textile manufacturing chain is really complicated and my experience had come from providing legal services to people like the Maine Manufacturing Association and sitting in a room and talking about how to do things and the regulatory climate and the legal climate. That’s a lot different than the hands-on experience of negitiatong with vendors and how to make a whole supply chain work. It was really that experience—whether we did well or poorly—that gave us the foundation for what we’re doing now.
You bought the assets in 2012 of the JCA dyehouse in Massachusetts that had recently shut down. That seems like it must have been a big decision. Given you weren’t very confident in how you ran your farm-based yarn business, what gave you the confidence to want to make this major investment?
Well, I’d like to tell you it was a well thought out, brilliant strategy with a hardcore business plan laying the foundation for how wildly successful this could be….
So, the story was while doing the farm yarn, JCA, which did a lot of things; it built kits, and sold yarn, pattern development, it did all kinds of different things, but a small piece of what they did was provide commissioned dye services to people like us that we doing a farm-based yarn. And so in a very casual way in 2012 there were some of us out having a glass of wine and someone said the dyehouse at JCA is going to close because the owner passed away and there just wasn’t enough horsepower in the business—it had been a $10 million business at one time. When it closed there would be no place for small producers of hand-knitting yarns to go to get dye services. So three of us said, “well, let’s buy the dye equipment and move it to Maine.” So, we did.
Buying the dyeing equipment was the least expensive part of it because it was old equipment; still usable and we’ve actually taken that core equipment and taken it from zero sales in 2012 to gross sales last year on that side of our business we were just under a million. And again it’s not from brilliant marketing strategy; it’s just there’s a real need in the market for that. It takes you from being the hand dyer in the kitchen to the ability to access a dyehouse that can start you into a commercial market.
So the majority of your customers are people like you were at SuriPaco?
I would say that’s probably not entirely true. There were farms—probably half a dozen farms—but the real customer base were people who were business-to-business people producing hand-knitting yarn for sales into retail stores, so people like a Halcyon or yarn companies that are designing yarns and patterns. Quince is a Maine-based yarn company and they’re one of our customers, and Brooklyn Tweed. But the problem was the equipment we bought was old and it would only do skein dyeing and it was very energy inefficient.
The new markets for textiles is in technical textiles, be it synthetic or performance enhanced textiles, which requires new winding equipment, new dye machinery. So that’s where we’ve shifted the last two years. We do both now, so we play in the natural fiber world, but we’re now ramping up and dyeing technical textiles for the rope and cordage industry, athletic wear. So the business has changed dramatically.
You received a $220,000 development loan from the Maine Technology Institute in 2015, which at the time you said was going to be used to expand into dyeing more technical textiles.
The first big pivot toward synthetics was when Sterling Rope came to visit in 2013 and said ‘we think it’s great you’re doing hand-knitting yarn or the arts and crafts side, but if you could do technical textiles, we’d move all our business here.’ So that’s what started that discussion. We set up research protocols with them because they do climbing rope and firemen safety rope and have to meet certain safety standards, regulatory criteria, and performance expectations. We had to do all that in Europe. We did the dyeing over there, brought it over here, Sterling tested it according to their parameters, and then once we knew we could do it we needed to go find the money to order the equipment.
Some people may think MTI is a strange place because they look at yarn and threads and don’t think of textiles as new technology. But because the way the textile industry cratered in this country there hadn’t been a lot of research and development, nor even new equipment brought into the country for doing technical textiles. So when we did all our R&D work, that was all done in Italy because the equipment wasn’t in this country.
What have been the biggest challenges you’ve faced in starting and growing your company—both personally and professionally?
My guess is most entrepreneurs would say cash and finding money is the biggest challenge, and certainly finding money and managing it, especially given how quickly we’re scaling and all the changes happening to us, is a challenge, but I think our biggest challenge has been understanding how to manage it—not just the money, but to manage the growth and the operations and learning to have confidence in decisions that impact other people. Five years ago we had zero employees and we had day jobs. Now we have anywhere from 14 to 18 employees, so I think having the wisdom and expertise to manage that kind of scenario has been our biggest challenge.
Have you taken advantage of any resources or mentors in Maine’s startup community to help you meet that challenge?
Part of the answer to that is who has skin in the game. In our case, because we were thinly capitalized with a big agenda, we had to go find money from different pots to spread the risk a little bit. That’s ranged from Saco Biddeford Economic Development to CEI to MTI. And by far, MTI I would say with its wrap-around entrepreneurial programs, has been our biggest support in meeting those challenges. They make people who have been there and done that and have experience in various areas, be it sales or operations, available to the clients in their portfolio and it’s at little or no cost to use usually. It’s sort of like having a built-in mentor or board of directors when you’re not quite big enough to have a board of directors.
Other organizations have been helpful to us. But it’s because we knew how to leverage the resources, so things like Workforce Solutions, and the Workforce Through Goodwill and the Workforce Development Boards from an economic perspective to get access to highly trained expertise from a pool of people who may have been laid off. For example, we got support to train three people when Nissen closed.
Another big challenge is time. You just don’t have a lot of time.
You mean you and Ken don’t have enough time to handle everything you need to handle?
I worked in an environment for years where when Whit called me up and paid me an outrageous sum of money at an hourly rate to think about your legal problem, you’d want to be sure I’ve thought of every variable and then some. But as an entrepreneur you don’t have time to do that kind of analysis and keep the trains running on time. So you have to learn to make decision, move on, and live with the consequences.
Have you made any bad decisions?
I would say we’ve made thousands of bad decisions, but I think we’ve learned to prioritize decisions based on what the consequences of those decisions are. So whether it’s hiring the employee you turn stuff over to, and then later find out they weren’t doing a very good job, or wondering do I spend the $100 that I have in the bank this week on coffee for the employees or paying a bill? So I think we’ve made lots of bad decisions. I don’t know any entrepreneur or anybody in life that doesn’t. But we’ve learned to prioritize a lot better. Add I don’t know where you learn that unless you just live through a startup.
It’s such a capital intensive business—how do you make the numbers work when all these other dyehouses have closed around the country? What do you attribute to your success in running this business?
Well, there is a clear niche in the market right now because of the emphasis on domestic manufacturing. For example, the Berry Amendment says if the government wants to put color on berets or caps or wool clothes that they have to do it in the U.S. So the domestic theme is a big one.
In a Mainebiz interview back in 2014 you said that “in five years we project 40 employees and $3 million in revenue.” Where are you in achieving that goal?
At the end of 2016, without having the new equipment online, we just crossed a million. If we scale correctly, I’d say we’d be at $3 million at end of 2018. That is our goal and I don’t think that’s unrealistic because we’re getting new customer inquries from Canada now, from further down in New England, in bigger commercial volumes. So I think that’s realistic. I don’t know if it will be 40 employees, though. One of the things we’ve learned is we have to find ways to make people’s jobs easier, but keep labor costs down. Because textile dyeing and manufacturing is very labor intensive. So I don’t know what the employee number will look like yet. I’d say somewhere between 20 and 40. I’d say we have 16 employees right now if you count the part-timers, and we’re just now talking about extended hours. If we ramp the way we’re saying, I think we’ll be over 20 by the end of the year.
For someone who didn’t think they did a very good job running their yarn business, you seem to have done really well in this endeavor. How do you feel about it? Do you feel a level of satisfaction for making it this far, or are nightmare scenarios still waking you up in the middle of the night? Where are you in the emotional rollercoaster ride of entrepreneurship?
I think we’re still pretty close to the ground, worrying on an hourly or a daily basis about whether our next step is going to be the right one. The difference now and between when we first started is we have a much larger investment than we had ever thought we were going to have in 2012 and we’re now taking on and pushing into a brand new market. So we have to be thoughtful about the quality and our ability to provide these scaled-up services. So we’re still laying awake at night a lot. We really want it to succeed at every level because so many people have touched this project.
It is cool to have scaled a business from nothing to what we’re talking about it gross sales in Maine, because not too many people make it across the finish line. But we want to stay fairly humble about it and not too cocky about the outcome.
How much have you invested in the business?
We’re about $1.3 million into it.
So are you profitable at this point?
We just became cash positive.
We’re just now looking at bringing on one or two small outside investors, because we’re going to need working capital to scale into the next phase. So we’re trying to decide how to navigate that. Because with the equipment we acquired we could probably do 30,000 to 40,000 pounds on a single shift a month, but the Canada people who are talking to us are talking about 100,000 pounds a month. And we have another company that is based out of Canada and the U.S. that does thread for the sewing industry all over the world, and they are putting in new sewing equipment and they do 140,000 pounds a week. And they’re coming to visit next week! So if we’re going to scale into that we’re going to have to look at equipment expansion, which we have room to do. But we’re going to need some partners.
So you installed the new equipment last fall and as you’re basically doing your first production runs you’re already getting inquiries that would require more than double your capacity? That must be encouraging.
It absolutely is. And as I said earlier, there is a need in the market. The market was there. We’re just trying to fill that need, and we want to do it a way that has the minimum environmental impact, has good domestic themes to it. I’m a huge proponent in Maine for integration and training and education of the new American workforce. For us, we have people from five different countries who probably speak among them eight to 10 different languages. They’re the ones who have really gotten us across the finish line.
Do you have any advice for people thinking of starting their own business?
Take it a day at a time. I would say… I don’t want to say ‘never give up’ because that’s not really right, but you have to have a tremendous amount of grit or determination. A day at a time, grit and determination, and then flexibility. Learn to be flexible if you’re not. It’s easy for the entrepreneurs and founders to climb on the horse and assume their way is the right way, but you can’t do that. You have to be an active listener and then learn to flex. I would say maintain a sense of humor, but I haven’t done very well with that. I don’t have much sense of humor anymore. I have huge admiration for people who take this path and maintain their sense of humor.