CREATING VISCERAL DELIGHT WITH
Posted May 2016--WholeTrees© Architecture and Structures makes structural systems from small-diameter tree trunks and their branching portions that can be used as substitutes for milled lumber or steel in many building types, both residential and commercial. Because it has engineered a higher market value for what would otherwise be a low value by-product of sustainable forest management, WholeTrees© has at the same time created an elegant solution for the otherwise extractive forest products industry to thrive as an active participant in the transition to a regenerative economy.
The far-flung places where WholeTrees© creates visceral delight.
WholeTrees©’s CEO Amelia Baxter attributes the success of the company’s business model to something more ineffable, but just as real, as its profitability and scalability: “One real reason we have been able to begin to carve out national markets for our product,” she maintains, “is because these are transformative times that are shifting people’s mindsets in major ways. We have a product that speaks to that shift. It fills people with visceral delight.”
Amelia worked on various land and agricultural management projects before she met Roald Gundersen. Gundersen had been using unmilled timber for construction for some time before he and Amelia co-founded WholeTrees© on 134 acres of forest near La Crosse, Wisconsin, in 2007. The company has since moved its headquarters to Madison, WI.
Amelia uses the term “regenerative” to describe the relationship we need to have with our forests, and is excited to head up a company that is part of a larger web of businesses across industries, all looking to operate in right relationship with the natural world.
WholeTrees© purchases small diameter trees from state lands and from contractors that are thinning forests, and also harvests it from its own forests. It then works with architects and general contractors to create the engineered plans for construction that will meet local building code standards. The company’s structured products use patented connections that leverage the superior strength of round, unmilled timber to span spaces that in the past have only been spannable by steel or expensive, glue-laminated products. In recognition of its innovative technology, WholeTrees© won The National Forest Foundation’s Barrett Foundation Business Concept Challenge in 2015 for the best entrepreneurial approach to addressing the challenges facing America’s National Forest System.
Since 2011, WholeTrees© has also been awarded $1.2 million in Federal grants to-date, enabling the small company to undertake the requisite research and testing to bring its product to market. However, turning that R&D into commercial success required raising $1.5M in convertible bridge loans in 2014 and 2015. WholeTrees© is now raising up to $3M million in a Series A round of capital. Those funds will be used for two objectives: national market development to leverage several completed high-profile projects and to further demonstrate high margins in key niche markets; and integration of a proprietary software platform into company operations, allowing for streamlined connectivity between supply chains and market users. These two areas of focus will raise the company’s profile and value as the leader in round timber structural systems for commercial markets.
YMCA, Dallas, Texas
Amelia considers WholeTrees© business model a bit too “hybrid” to appeal to the average venture capital investor. The company has instead been seeking investment from the green VC market, agricultural technology investors, women investors, and a growing impact investor community—those high-net-worth individuals, foundations, and family offices who are more likely to extend patient capital than traditional VC investors, but who will nonetheless eventually seek a strong return on the sale of a scalable, regenerative business.
Given the strength of its proven technology and the earnings the company is projecting over the next 5 years ($1.2 million in 2015 to a projected $15 million in 2020, with gross margins of 40 percent or higher—well above industry standards), Amelia is confident that WholeTrees© will be an attractive acquisition candidate for a larger forest products company within that timeframe. That might seem like an unfortunate last act for a regenerative business, but Amelia explains why she believes that isn’t the case for WholeTrees©: “We believe our sale would represent a scaling of the regenerative use of forest products.
The forest products and construction industries work on very large scales, and any technology able to actually make a difference in forest economies will need to be a part of a larger network of companies.
The likely progression would be acquisition, although WholeTrees© could grow into a profitable beacon of regenerative technology, licensing its services, products, and software to these larger entities, ” she maintains.
Indeed Amelia asserts that the company's board and management is prepared to contemplate alternative possibilities for the company that might satisfy investors, other than acquisition. “We could imagine creating a company that is never acquired but maintains partnerships and relationships with other larger companies,” she reports. “I hate to put one reality in stone, because when one is profitable, has proven national markets, and is the only one doing what we do, I imagine we will have quite a few options to consider.”
Meanwhile the market for wood in commercial construction is on a strong upward trajectory, with the most significant recent innovation in cross-laminated timber (CLT) for tall building construction. This comes out of the growing recognition that timber construction represents a carbon sequestering solution that also makes for healthier forests. The movement has received support from international policymakers, and most recently, here in the U.S., the USDA announced the winner of a $2 million competition to build a CLT skyscraper in Manhattan. Undersecretary of Natural Resources and Environment Robert Bonnie has also been promoting polices that require all new Forest Service and USDA buildings to use wood construction.
Beyond carbon sequestration and the lower greenhouse grass emissions associated with wood construction, it is also simply cheaper to produce wood for construction than steel and concrete. If fuel prices begin to rise as expected in the coming years, wood will become an even more attractive commercial option. “I have heard of steel companies that also broker wood products to hedge their bets on rising fuel prices and other commodity shifts between the two materials,” Amelia reports. WholeTrees© is in fact considering seeking out a steel strategic partner to sell its wood as a green alternative.
Festival Foods Installation in Madison, Wisconsin, was WholeTrees© first commercial venture.
The notion that a steel company might acquire WholeTrees© is not as farfetched as it might sound. “If you think about a conventional industry like steel, they might want to acquire, integrate, and learn from regenerative models like ours,” Amelia says.
Whether or not WholeTrees© is eventually acquired or it develops strategic partnership with large forest products or even steel companies, Amelia intends “to stay involved at the cutting edge of what is possible with our economic relationships with the earth,” in particular developing the next solutions for a regenerative relationship with forests.
“Forests are our giant air and water cleaning machines,” Amelia explains. “If we could just keep innovating the way we manage what we take from them quickly enough, maybe our species’ place on this earth might stand a better chance.”
ROALD GUNDERSEN AND AMELIA SWAN BAXTER, CO-FOUNDERS OF WHOLETREES©
I planned and began building an experimental straw-bale, insulated, pole-frame house, and began harvesting locust, aspen, and other abundant trees from a crowded stand of hardwoods for round timbers. I found I could diversify the forest stands and restore much of the native understory species by culling and using the aggressive invasive and successional species. The remaining diverse hardwood trees also grew significantly faster. From this grew WholeTrees© basic principles of using "the worst first" and leave the best.
We have since built using fallen, diseased, invasive, successional, wind-bent, and dead trees from many stands using light-on-the-land logging techniques. We not only use small trees but also branching and curved portions of trees. Not to worry, we leave plenty of decaying habitat trees. Taken together the resource of whole trees is a magnitude larger than trees that can be commercially milled, and can be harvested more frequently, making forests more productive and valuable. This can influence land use and help stem the tide of deforestation.