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The Boston Globe OnlineBoston.com Boston Globe Online / Sunday Magazine Nov. 7, 1999

Yankeeingenuity.com

By Scott Kirsner

From the highest part of his Christmas tree farm in Swiftwater, New Hampshire, Mike Garvan can look north into the White Mountains - to Bethlehem, Franconia, and Twin Mountain - where he used to work for the US Forest Service. It's the last day of August, and on his way up to this overlook, Garvan has passed row upon row of Frasier and balsam firs, each tagged with a different colored plastic ribbons to indicate its quality. Occasionally, he pulls out a pair of orange-handled clippers from a holster on his belt and snips at a tree so that it will grow more evenly.

"By the early '80s, I was moving into a desk job with the Forest Service, and my next promotion would have been to West Virginia," says Garvan, who has an eaglelike nose, wavy dark-gray hair, and, a white beard. "I wanted to stay in New England, so I started looking for farms I could lease. I struggled at first to make a go of it, like many small businessmen."

Today, Garvan's Mountain Star Farms has about 75,000 trees on 80 acres. It's larger than most New England Christmas-tree operations, but in Garvan's words, it is "still a very small business, with modest sales revenues."

But that's starting to change. Last year, Garvan began selling his Christmas trees over the Internet. He sold 200 trees, boxed in heavy, waxed cardboard and shipped via United Parcel Service, and earned roughly 50 percent more profit on each than he would have if he had sold them wholesale. This season, Garvan expects that he'll sell between 400 and 800 trees through his Web site. Those transactions will account for 15 percent of his total volume (but 30 percent of his revenue), and his spreadsheet projections indicate that those Web sales with their high profit margins could represent half of his business percent of his business - or more - within five years.

"The business was doing fine before the Internet, but the Net gives the business an added dimension, added profitability," Garvan says, walking down the hill toward Swiftwater Cottage, a former housekeeping cabin painted white with green shutters. It now serves as an office and welcome center for people who come to the farm in November and December to cut their own trees. Garvan is accompanied by Ben Hoyt, the farm manager, who started working at Mountain Star in 1983, shearing trees as a 13-year-old hired hand. "It's also made it possible for me to make a generational transfer of the business to Ben."

Throughout New England, the Internet is changing the dynamics of business, making communication more efficient and opening up global markets. But the medium's effects are most startling among smaller enterprises, the farms and home-based businesses that have allowed New Englanders to carve out a living for centuries. Not only does the Net permit entrepreneurs throughout the region to live where they want while selling their products around the world, but it's making cottage industry far more financially rewarding. Of the fifteen entrepreneurs I spoke to for this story, only one - a grouchy golf-club maker in Vermont - said his Web site wasn't generating substantial new income.

More representative is Anne Kaye, a spirited 70-year-old antiques maven in North Providence, Rhode Island, who sells mahogany bedroom sets and carnival-glass punch bowls on eBay, the popular on-line auction site based in San Jose, California. Before she bought a computer and taught herself how to surf the Web, Kaye says she would buy a bedroom set for $700 and sell it to a wholesaler for $850; on eBay, she sells the set directly to a consumer, who pays as much as $1,300 or $1,400 for it. "The last person in the chain makes the most money," explains Kaye, "and right now, we're the last person in the chain.

"Before, I had hamburger every day," she continues before executing a perfect vaudevillean pause. "Now, I have steak!"

Even the most perfunctory Internet search turns up hundreds of small New England businesses that have ventured into the wilds of e-commerce. There are shops in the Berkshires that sell antique tools, landscape painters in central Vermont hawking their art, New Hampshire firms that sell architectural elements salvaged from old houses, a blacksmith, used snowmobile dealers, flower growers, maple syrup merchants, and bed-and-breakfasts galore. One typical B&B; owner, Bob Bonkowski, who with his wife, Sue, runs the Heron House B&B; in Southwest Harbor, Maine, says that his Web site is responsible for 70 percent of all new guests.

"People who consider the rural countryside a haven have always sought to try to make a living there," says Tony Elliott, co-founder and vice president of SoverNet, an Internet service provider in Bellows Falls, Vermont. "The Net provides a link, makes it easier to sustain a cottage industry. You don't have to be in the big city anymore to do the kind of commerce that you need to support yourself. The Internet brings you in touch with all of the people and the resources you need." Elliott says that an increasing number of SoverNet's customers are inquiring about on-line storefronts.

While cottage industry in New England may never have been endangered, the Internet - by making it more remunerative - seems to be fortifying it for the next century. "Cottage industry is very representative of New England," says Laurel Ulrich, the Philips professor of early American history at Harvard University. "People love the independence of having their own land. But most of New England has such bad soil - it's just rock. So going back to the Colonial period, it was always a matter of patching together a little bit of farming, a bit of trapping, some fishing, lots of weaving and spinning."

In contrast, though, the new wave of Internet-enabled cottage industry allows its practitioners to focus on fewer things. When asked whether she's surprised at the extent to which the Internet is super-charging small businesses like Garvan's, providing them with a reliable, profitable stream of orders, Ulrich says she isn't. Why? Her two sons, both PhD engineers, run a small business in Lee, New Hampshire, that makes high-performance kick scooters called Xootrs. "They're a form of personal transportation," Ulrich explains. "They are to old-fashioned scooters as Rollerblades are to roller skates." And where can one buy a Xootr? On the Web, of course.

Walking into the converted three-car garage in Carol Coski's side yard is like entering the barrel of a kaleidoscope. Every wall is covered with brilliantly colored cotton fabrics: batiks from Bali, pastel plaids, and offbeat prints, like hogs on Harleys, duded up in leather jackets. In one corner is a jumble of red-white-and-blue priority envelopes from the US Postal Service. Coski stands behind a counter, in a short-sleeved shirt and shorts that she made herself, helping a customer who has driven here, to Westminster, Vermont, from her home in Western Massachusetts.

Before Coski's shop took over the garage, her husband, Jim, used to raise sheep and rabbits in it. The Coskis have always been an entrepreneurial pair; before starting her fabric shop, Quilt-a-way, five years ago, Carol ran a singles club in Rhode Island and made neckties. Together, they've bred dogs and sold homemade dog biscuits, an operation that at one point employed 40 people.

"My daughter, Jan, is a computer programmer at Brown University," Carol Coski says, taking a break at a picnic table just outside the shop where, in good weather, she teaches classes in fabric painting. "She always used to say, `You're nobody if you don't have a Web page.' I was doing e-mail but not the Internet, and eventually I said OK. So Jan made me a Web page for Mother's Day.

I wasn't expecting that it would give me anything more than Web presence, but to my surprise, people started ordering." These days, Coski says, 70 percent of her business comes from the Web site in the summer, and 85 percent in winter, when her local customers are less inclined to venture outside. Visitors to the site can browse among roughly 1,000 fabrics and order them using a secure form.

While Coski enjoys meeting her customers face-to-face in the shop and participating in the quilting community through classes and competitions - her own quilts win prizes at fairs around New England - she says that the Westminster area can't really support a retail store that doesn't also have an Internet outpost: "Initially, I thought I would be serving just the local community."

But, she continues, "If it weren't for the Internet, I'd be out of business already. Quilt-a-way doesn't just appeal to quilters in the area. I'm appealing to quilters around the world."

Every night after dinner, Coski and her husband process the orders that come in from the Web site - anywhere from five to 45 a day. "On a slow day in the store, I might sell $36 in fabric," Coski says. "But that night, I'll do $650 on the Net. Some nights, we've had orders for over $1,000."

Coski has loyal customers in Canada, the United Kingdom, Australia, and Hong Kong. She explains that often, they can find a better selection of fabrics at better prices on line than they can in their local retail stores, even when shipping costs are factored in. "We have orders that I've stumped my postmaster with," Coski says, watching a glossy blue Volvo pull into her driveway. It's after 4 p.m. - closing time - but she'll open up the store anyway. "I come in and say, `Bernie, where is United Arab Emirates?' And he says, `I don't know, I'll look it up."'

Since Coski isn't interested in running a purely virtual enterprise - she would miss the interaction that comes with helping customers with their projects - Quilt-a-way is just about the perfect business for her. The Web provides the financial stability to do what she loves. And she can live where she wants, on four acres just off Interstate 91 in southern Vermont, with a brook on the property. She and Jim can still breed dogs; a gaggle of shar peis romp around the yard, sniffing at everything. Every January, the Coskis decamp for a month to Tampa, Florida, where Carol teaches a class at a quilting store run by a friend. When they return, even though the store has been locked up, they've got a queue of several hundred orders waiting in the e-mail in-box.

That kind of mobility is one of the most appealing characteristics of a Web-oriented business, but it also means that Web proprietors can easily uproot their business and take it elsewhere - a possibility the Coskis think about whenever their driveway ices up. "If we decide to move to North Carolina because of the winters here," says Jim, "75 or 80 percent of the business comes with us."

How does the Coskis' backyard business compare with their earlier endeavors, like the dog-biscuit company? There isn't the pressure of having employees or overhead, says Jim, who adds that he and Carol are earning more than they ever have. A new Jeep Grand Cherokee in the driveway, with "Coski" vanity plates, is evidence.

Forrester Research is a Cambridge company that tracks technology's impact on business and also makes estimates about how fast electronic commerce is growing. According to Forrester's projections, small and medium-sized local businesses sold $680 million worth of goods and services on the Web in 1998 - a number that, by 2003, Forrester expects will grow to $6 billion.

While those numbers sound impressive, Forrester analyst Charlene Li explains that small and medium-sized local businesses, over that span of time, will actually be losing a share of on-line purchases to their bigger competitors. According to Li, while the local small fry sold 9 percent of everything consumers bought on line last year, by 2003, they will represent only about 6 percent of Net purchases. In the off-line world, Li adds for comparison, fully 50 percent of all retail sales are handled by small and medium-sized businesses.

"The local players got to the Web first," says Li. "But they don't have the infrastructure, the back-end systems, the marketing money. So when the big guys come along, they have this huge infrastructure, lots of inventory, and powerful brands. It takes longer for them to set up on line, but once they do, they dominate. Most of the volume [in any product category] will go through the five biggest players."

That doesn't spell doom for the Quilt-a-ways of the world, though. Small-business people tend to be savvier than, say, the 25-year-old founder of a Silicon Valley start-up with $5 million in venture capital in his pocket. Rural entrepreneurs, Li says, "can't afford to put their money into a black hole. If the money isn't generating profits, they won't spend it."

There is room on the Web for the garage entrepreneurs and backyard tycoons, Li says. "They do have a niche, even if they're not making very much of a dent [in the overall e-commerce figures]. Those that can find a place on the Web will sell more than they've ever sold before."

To the CottageIndustry.com CEOs, that's hardly bad news.

At Jock's lunch counter in the tiny town of Fairfield, Maine, the waitress knows exactly what Frank Tozier Jr. wants: a burger, no fries, and a bottle of Poland Spring water. Tozier works just up the road, and he drives his red pickup to Jock's every day for lunch.

"What do you think, Michelle?" Tozier asks the waitress. He looks as if he could be the actor Woody Harrelson's younger brother.

"I try not to," Michelle answers.

Tozier's company, AC Antiques, is an example of how the Net is creating small businesses from scratch. Tozier grew up on a dairy farm in Fairfield, and he worked it until he was 30. After a short stint working for a friend who manufactured wholesale gift items, like wooden duck decoys, Tozier began to hear about people who were selling antiques on eBay. Earlier this year, Tozier, an antiques neophyte, tried his hand at listing a few items on the site.

Like Anne Kaye in North Providence, he was astonished at the prices antiques could command on the Web. Before long, he was buying in much larger volumes; on one day in early September, he had 103 items up for bid on the site, from Victorian marble-topped tables to Art Deco wardrobes to antique phonographs. Every month this year, Tozier says, his sales on eBay have doubled.

"I've shipped a bunch of stuff to Hong Kong and several pieces to Alaska," he says, driving toward the rented warehouse where he stores most of his unsold inventory. "Everybody's on the Net. I'll ship anywhere you can send me a check from."

When asked whether his business is doing better than the antiques shops in nearby Waterville that don't sell on line, Tozier, not an eager conversationalist, nods.

"There's no place to have a store that gives you the same reach as the Internet," he says, as if it should be obvious.

Before AC Antiques, Tozier had never been a boss; now, he has five employees, three of whom handle crating and shipping, one who cleans the merchandise, and one who handles paperwork. This month, the business's main location, where the antiques are readied for shipping, was slated to double in size, from 4,000 to 8,000 square feet.

"I always just assumed I'd be a farmer," says the accidental antiques mogul. "They wouldn't have predicted this in my yearbook."

For others, like Deborah Evans, running a Web business makes it possible to escape from high-pressure metropolitan careers. Evans, who along with her business partner, Dede Johnson, runs the site MaineNeedle point.com, had been a construction manager for high-rise buildings in Hartford, Boston, and New York.

"We wanted to do something fun, because we were too old to get up in the morning and hate going to work," says Evans, who is dressed as if she's ready for an afternoon of sailing, in a polo shirt with the collar turned up, boat shoes, and an eToys baseball cap. "And we both knew that we couldn't work for anyone else anymore."

Now, they spend their days in Johnson's converted dining room in Blue Hill, Maine, with a dog at their feet, a wall covered with various hues of needlepoint wool, two large-screen monitors, and several printers and scanners. "We're a design studio, a manufacturer, and a retailer - all in one room," Evans exclaims. But there's no sign in Johnson's front yard advertising MaineNeedlepoint.com's existence; the Web is their primary retail outlet, and all of their needlepoint patterns are designed on the computer and produced on the premises.

Customer response to MaineNeedlepoint.com has been so positive that Evans has started to write a business plan, and the partners are making plans to incorporate and find outside investors to fuel the company's growth. Even more exciting, to Evans, is the chance to teach technology skills and business sense to high school students and recent graduates in the area.

"One of the things that we hope we can offer, as we grow, is an opportunity to see a career that isn't picking blueberries or lobstering," Evans says. "If you've never touched a computer before, we'll mentor you. It would be really nice to give back to this community."

Inside a large rust-colored barn with two walls open to the elements, Mike Garvan and his farm manager, Ben Hoyt, are getting their packaging equipment ready for the 1999 holiday season. First, to calculate shipping costs, they weigh the tree using a hanging scale. Then, they place the tree on a machine that vibrates and shakes it vigorously, which causes any leaves, brush, or brown needles to fall to the floor. Then Hoyt pulls a 7-foot-long cardboard box from a pallet in the corner. He lays the box horizontally on a work table and then feeds a cable with a loop at the end through the box. Garvan attaches the loop to the base of the tree, and Hoyt uses an electric winch to pull the tree, base first, into the box. It's amazing to watch the tree fold up into itself as it disappears into the box.

Garvan slips some freebies into the box with the tree. There's a pamphlet about Mountain Star Farms, along with care instructions for the tree, a tree-disposal bag, and, for the first hundred or so customers, a tree ornament. Then, he uses his PC and laser printer, loaded with software from UPS, to create a shipping label for the box. (He makes a point not to ship trees on Thursday or Friday if he can help it, since he knows they'll spend at least part of the weekend sitting in a heated warehouse, which causes the trees to dry out.) This 7-foot Frasier fir, which would have sold for $23 to a wholesaler, or $28 to a customer who came to the farm to cut it himself, will sell for $40 to a Web shopper.

Who is it, exactly, who uses the Web to buy a Christmas tree? Garvan admits that picking out a tree, for many people, is an even more personal choice than picking out fruits and vegetables at the supermarket. But he notes that Web-based grocery delivery firms are finally gaining momentum, and he brags that once people see the quality of his trees, they will become customers for life:

"I think about the guy who works on Wall Street who doesn't want to carry a tree home in the snow, or the retired couple in Florida struggling with the tree and putting it on top of the Miata. That's as opposed to the guy in the brown suit showing up at your door and saying, `Here's your tree."'

Garvan's sales pitch is pretty well honed. He's also enthusiastic about expanding his on-line offerings and is considering selling wreaths, ornaments, and tree stands, in addition to the tree itself. Now that the Net has enabled a direct relationship between Garvan and his customers - he's like the Michael Dell of the north country - anything is possible.

"Finding customers was always a barrier to growing our business," Garvan says, sitting at his desk in the cottage. "The Internet has solved that."

Ulrich, the Harvard professor and the Pulitzer Prize-winning author of A Midwife's Tale: The Life of Martha Ballard, says that this direct channel from cottages and farms to customers is a new wrinkle for New England entrepreneurs.

"In the 19th century, cottage industry meant piecework," she says. "You'd get raw materials from somewhere else, you'd process them, you'd send them to the storekeeper, he'd send them to Newburyport, and they'd go off to some kind of market." Having a closer relationship with the customer is not only a way to hold on to more of the profits, according to Ulrich; it provides more of an opportunity for the CottageIndustry.com CEOs of the next century to "be more creative and do something that they love. They can take advantage of the attraction of being able to live here and not have to commute to a city. There's something about the freedom there that's new."


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