Light bright | Portland's Eco-story LLC says the future is in LEDs. Fortunately, customers are starting to listen.
Bill Stauffer and Mark Shoemaker are not engineers. They’re not inventors. They didn’t even study science in college — Stauffer majored in Chinese studies and Shoemaker studied economics. But they are possibly on the verge of becoming successful entrepreneurs by selling the latest, and many say the greatest, light bulb technology since Thomas Edison invented his world-changing incandescent bulb in 1879.
The two men partnered up to launch Eco-story LLC, based in Portland, 18 months ago to design, manufacture and sell light-emitting diodes, or LEDs, to retail stores and chain restaurants. They say they were inspired to start the business both because of its profit potential and for a chance to peddle products that will help preserve the environment.
“We saw a market opportunity that matched up with our personal ideals and goals,” says Shoemaker, who lives in Denver and markets the company’s products in western states. They dreamed up the name Eco-story, which Shoemaker says reflects their mindset. “We liked the tag line: What’s your eco story, what are you doing, and what are we doing to help the environment?” he says.
The partners zeroed in on the restaurant and retail store market because these businesses are sensitive about ambiance lighting, and also are racking up huge electricity bills by having to keep their many bulbs turned on through long days. “We feel that is the biggest bang we can have with the business,” says Stauffer, who lives in Portland and oversees Eco-story’s headquarters on Forest Avenue, on the outskirts of Portland. “Their costs are going up and they’re looking for ways to save money.”
The desirability of LED bulbs largely lies in their energy savings: Experts say the LEDs at their best are 85% more efficient than an incandescent bulb, and can keep burning for as many as eight years. Rather than dying out, they dim as they age. LEDs even have the potential to outshine and outlast their eco-friendly competitor, the compact fluorescent bulb, which often casts a cold, bluish light (and even contains oh-so-eco-unfriendly mercury).
While some dispute how much LEDs will shape the future, others readily call it revolutionary.
“LEDs are a coming technology,” says Gabe Arnold, the lighting initiative manager for Efficiency Vermont, which has offered rebates for some of Eco-story’s LEDs bought by companies in the state. “A lot of people are calling it the LED revolution. Chances are in 20 years, people will be using it as the primary light source for many of the things they do.”
Eco-story expects to post between $600,000 and $850,000 in sales this year, Stauffer says, adding that revenues should hit between $2 million and $3 million by 2009. The six-person company has in the past six months secured contracts with the outdoor retailer Orvis in Vermont, Chipotle Mexican Grill’s national restaurant chain and 100 Red Robin restaurants.
Poorly made LEDs are criticized for their chilly, weak light, and some of the earlier versions also died out quickly. The LED that Eco-story has created has overcome some of those problems, says its creators, by emitting a warmer, more natural light that’s more powerful than older models. The company, working with a team of hired engineers in North Carolina, also has created an LED that can be dimmed.
But while Stauffer and Shoemaker appear to be in the front of the emerging LED market, they face considerable challenges in the months and years ahead. They must first persuade customers to pay for the considerable upfront expense of pricey LED bulbs, which can be 30 to 100 times more expensive than incandescent bulbs. And competitors, including big players like General Electric, are hot at their heels.
“This technology is changing so fast, there will be better products within the year than even the products that Eco-story is putting out now,” says Arnold from Efficiency Vermont. “I hope Eco-story will keep up to speed with that.”
Another threat, too, is that the big light-bulb companies, like General Electric, also are working to create more efficient incandescent bulbs, which they can still sell at cheap prices while maintaining their profitable replacement business — due to the relatively quick burnout rate of these bulbs.
Eco-story’s first chapter
Stauffer and Shoemaker met in 2000 while working in sales and manufacturing for Superior Uniform Group, in the Florida-based company’s Oregon and Colorado locations, respectively. Several years after the two had left the company for other ventures — Shoemaker actually started another LED company that has since closed — they teamed up in earnest to form Eco-story, which they launched in the spring of 2007.
The company shares space with Storreytime, a custom uniform company in Portland Stauffer started with his sister, Karen Gellis. That arrangement helps keep costs low because the two companies share infrastructure and expenses, such as shipping and receiving costs, office space, telephones and even a few staff.
With these savings, Stauffer and Shoemaker have been able to devote more resources to product development — a critical component in getting ahead in the fast-paced LED market. A Denver company, Lighting Finance, owns 7.5% of the company, but Shoemaker and Stauffer say they each put up $50,000 in initial R&D funding to kickstart the development of the company’s LEDs. “We’re innovative,” Shoemaker says. “We’ve done a good job being on the cutting edge of the technology.”
Chipotle’s Director of Design Scott Shippey says for several years the restaurant chain, which serves Mexican fast food, had eyed LED technology, but the quality of light from the products didn’t pass muster. Chipotle wanted soft light for dining but ones that were bright enough to illuminate customers’ food. Eco-story, though, was closer than other manufacturers to producing an LED with light that was as good as an incandescent, Shippey says. After months of back-and-forth negotiations and testing between the two companies, Eco-story got it right. “We finally got to a point where they just hit it,” Shippey says.
Chipotle will replace its 50-watt incandescent bulbs with Eco-story’s 4.9-watt LED in every new Chipotle restaurant — about 150 in the upcoming year. Although the upfront cost per store is between $1,400 and $7,400, depending on the size of the store, Shoemaker says the chain should start seeing a payback between eight months to a little over a year.
To some, the price might seem prohibitively high. Arnold says the prices of LED technology should come down, even as the products improve. But he says any drop in price will likely take years rather than months. “It’s going to be somewhat slow,” Arnold predicts. “As manufacturing processes ramp up, prices will come done.”
Shoemaker says Eco-story is trying to lower prices by reducing the amount of aluminum used in the LED and altering the lights’ designs. Also, as the light-producing diodes evolve to become more powerful, fewer of them will be needed per light, bringing down the price tag. But Shoemaker says any price reduction will likely not be dramatic. “There’s a right way and a wrong way to build these things, and if you build them right, you need to use a certain amount of materials,” he says.
Running with the torch
At the moment, Eco-story is moving as fast as it can to stay ahead, refining and marketing their LED products for table lamps, hospital maternity wards, outdoor lighting, warehouse ceilings and other uses. Stauffer says in the past year his company produced fewer than 5,000 lights, but expects next year to sell 75,000.
At the moment, all the manufacturing is done in China. But Stauffer, who grew up in Massachusetts and graduated from Colby College in 1989, says he wants to bring the manufacturing end to Maine by late 2009.
Stauffer doesn’t mind working in China, and he speaks Mandarin Chinese fluently. Shoemaker praises his understanding of the Chinese culture. But Stauffer says if the assembly of the LEDs was done locally, he would be in a better position to ensure the products were well made. “It’s about quality control,” he says. The factory would likely employ about 20, he says, and pay roughly $12-$15 per hour.
And though one partner lives in Colorado and the other in Maine, Shoemaker says the two agree the factory should be located in Maine. “I understand that Maine has a strong labor pool that we can draw from,” Shoemaker says. Stauffer, however, still harbors some concerns about finding skilled workers here. “The real problem is the expertise,” he says. “The U.S. has fallen behind in a lot of these [technology] areas.”
Beyond looking at bringing its manufacturing base here, Eco-story, too, would like to attract local customers, who, as Shoemaker points, are primed to seek out solutions to offset their particularly high utility bills here. “It’s a great market for us, or will be when we start to get more traction,” he says.
Eco-story LEDs will be installed in at least one Maine location, a Red Robin restaurant in Augusta. And Stauffer says he’s sold some lights to Maine Green Building Supply in Portland.
Although Mainers seem to be the logical targets for LEDs, Maine hasn’t yet adopted a formal rebate program for LED technology. Rebates help persuade companies to buy LEDs. But while a company may have a strong desire to reduce electricity bills, it also may have some trepidation about investing in the new technology. “It took a long time to get [Orvis’s order] because its executives had gone to a Phillips seminar and were told LEDs weren’t there yet,” Stauffer says, referring to the international electronics company that got its start by selling light bulbs in the late 1800s. “They tested our product for six months.” The project to install its LEDs in Orvis’s flagship store in Manchester, Vt., as a tester for future stores was subsidized 50% by Efficiency Vermont.
Arnold at Efficiency Vermont says the state made a decision to aggressively push energy efficiency projects.
“We’re leading edge,” he says, adding that while the rebates are generous now, they will be reduced as the technology becomes more mainstream. “It is on the high side. It is a brand new technology and we want to get it out there.”
Rebecca Goldfine, Mainebiz staff writer, can be reached at rgoldfine@mainebiz.biz.
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