WALKING AWAY

AURI helps steer oils company
away from slippery slope

Story and photo by Greg Booth

Pequot Lakes, Minn.— Bob McLean wouldn’t strike you as a guy who has admitted defeat in the business world.

It might be his cheery appearance, marked by a youthful face that belies his 20-plus years in corporate Minnesota. It might be his great new job at a north central Minnesota technology company that values its employees as much as products and profits.

Or it might be this: McLean views a recent experience not as a defeat, but as a successful venture in exploring the market for extruded soy oil — even though the venture didn’t pan out. Without some insight from the team that helped his small business, McLean says, “In time and money, I would have doubled my losses.”

Last fall, McLean left a two-decades-long career with West Publishing in the Twin Cities to pursue a soy oil venture with his brother-in-law in North Dakota. Seeing a favorable business climate and market potential in the Herman, Minn. area, McLean sought help from experts, including the Herman Development Group and AURI’s Max Norris and Michael Sparby.

“We engaged in a very appropriate and extensive due diligence process,” McLean says. Their business, Goose River International, had done a fair amount of due diligence already, including an in-depth business plan, which Sparby, manager of AURI’s Morris office, helped fine tune. Ultimately, GRI hoped to tap into industrial markets for lubrication and solvents, as well as consumer markets for cooking oils.

“They came to us with some usable technology in hand,” says Norris, AURI’s oils expert in Marshall. “It constituted 10 to 15 project ideas. Maybe seven or eight were chosen to be the primary ideas.”

After completing initial lab tests on the oil products and extrusion technology, Norris says, “We immediately began to caution

Mr. McLean, ‘don’t run into this thing too quickly. Let’s evaluate the technology for you.’” Following more lab analysis and a public information search on extrusion technology, Norris says he and Sparby recommended against the additional technology investment. “If they wanted to spend money in this direction, the majority of items were in the public realm.”

A popcorn oil technology Norris examined, for example, didn’t have “any protection from a legal standpoint by patents. You wouldn’t have to be a rocket scientist to find out what they had done ... You could pull (the technology) off the Internet; it’s in the public domain.”

About the same time, the Herman Development Group, working closely with McLean and AURI, decided not to back the venture. It was an affirmation of his own decision not to proceed, McLean says. He credits Pat Conroy and Dan Ellison of the Herman group for being “delightfully progressive and well-organized.”

“I felt confident, as did AURI, that marketing and sales could move the product successfully. The market readiness of the technologies was a problem. The overall package GRI provided did not fit the investor portfolio criteria ... Those things led to the decision of the Herman group to not invest at that time.”

“It was a classic due diligence process,” Sparby says. “We were able to save a lot of money and a tremendous amount of time for the producers and others involved in the project.”

“There’s a lot of people who pursue a path in small business,” McLean says. “Some people hit a home run. Some get a walk. Goose River International has yet to get to first base.” Still, he doesn’t feel as though he struck out.

GRI is still in business, but without McLean. “I recognized it was time for me to move on,” he says. “I’m very hopeful for the people at GRI to find their focus product and move forward.”

“Not everybody comes in the door, gets money and does great things,” says David Bartholomay, AURI deputy director. Experiences similar to McLean’s “happen a lot,” he says. Part of AURI’s role is providing information to entrepreneurs who are considering a big investment, Bartholomay says. When the outcome isn’t assured by technology or the marketplace, it may mean not making the investment.

Just five months after contacting AURI, McLean started a new job search. Last May, he became director of sales and marketing for Hunt Technologies Inc., a design engineering company in Pequot Lakes, Minn. that works with the utility industry.

“In reality, did we save him money? Yes, we probably did,” Norris says. “We were disappointed, because it was an opportunity if we had been collectively able to put this thing together.” But in the end, “we think we did the right thing.”

“What we see many times are projects that are worth the investment,” Norris says. “Maybe one time out of four or five we don’t get past the diligence aspect. It falls apart due to technology, marketing, or financial issues. That (analysis) is one of the things AURI does well.