Path to Prosperity: Extract, Then Add Value
A unique contest in Southeast Alaska rewards innovation
The first winners of Path to Prosperity’s contest for Southeast entrepreneurs, from left, Steve Helgeson, Kevin Skeek, Sue Tyler, and Wes Tyler.
Photo courtesy of Path to Prosperity
When Steve Helgeson sees a big Sitka spruce, he sees guitars. Lots of them. Or more precisely, he sees perfect soundboards—the blonde, straight-grained panels from which most of the world’s guitars are built.
Helgeson is a boat builder who loves to play guitar. Some years ago, he began experimenting and built his first guitar. What he discovered is that making the curved lines of a guitar isn’t all that different from building boats, so he built a few more.
“The idea of heating wood to soften it and bend it around a frame is the same thing you would do with a boat,” he says.
The coastal town of Wrangell, Alaska, where Helgeson has built and repaired fishing boats for years, is a small grid of streets and houses carved from a lush rainforest where trees grow big. Sawmills have had a big part the town’s history.
“It wasn’t lost on me, living in Wrangell, that we’re here right in the heart of the Tongass forest where some of the finest soundboard material in the world grows,” he says.
In the timber business, a tree destined to become soundboards for cellos, pianos, or guitars earns a distinct title: musicwood.
As the years ensued, Helgeson went about running his wood shop and raising a family, but he continued to watch as musicwood logs were cut in the forest and shipped off to distant factories in Japan and the Lower 48. And it led him to wonder.
Photo courtesy of Kevin Skeek
Kevin Skeek playing a guitar.
The $110,000 Guitar
Kevin Skeek grew up in the village of Hoonah, a day’s ferry ride north of Wrangell. When he was in his twenties and working as an intern at Sealaska Corporation, the major private forestland owner in Southeast Alaska, he joined his superiors on what for him was a rather plum assignment to meet guitar company execs at an event in southern California.
“I was playing guitar by then. I had an absolute passion for guitar,” he says. “When I was there, I was holding a guitar that was worth $110,000.”
It was the most beautiful instrument Skeek had ever seen—and its spruce soundboard had come from a Sealaska forest. It was built by the famed C.F. Martin and Co. of Pennsylvania.
“And they were explaining to us how they had used our Sitka spruce for their tops. And that just blew me away. It was then that I realized I wanted to get into the guitar building business.
“Right then and there I said, ‘Why aren’t we doing this?’”
A Contest for Entrepreneurs
Business ideas are not uncommon, but the good ones are. And both Helgeson and Skeek knew that turning an idea into something more, with a storefront, a URL, and a cash flow, is an uphill climb.
“The idea of a guitar building business was really a dream,” Helgeson says. “But you know how dreams are. If you’re a busy person like most people are, you have a place somewhere behind your everyday responsibilities and obligations where you stick dreams and it’s kind of where they stay.”
Skeek’s “aha” moment at the California guitar expo hadn’t gone anywhere either. Despite his zeal, his idea had languished largely forgotten for seven years.
Then, in 2013, came a new entrepreneurial contest promising prizes of $40,000 for two winning start-up businesses. The contest was looking for entries from people like Helgeson and Skeek. Called Path to Prosperity, it was open to aspiring entrepreneurs who live in Southeast Alaska and who are committed to a “triple bottom line” approach to business. In short, it’s a business model in which profits matter, but paying attention to measures of how a business affects people and the planet are equally valuable.
Haa Aaní, a Sealaska subsidiary, and The Nature Conservancy, a conservation group with a strong Southeast Alaska presence, sponsor the Path to Prosperity contest.
Helgeson was in. He drafted a business plan, working early in the morning between the hours of four to seven before he went off to work.
Upon learning of the contest, Skeek recalls thinking, “This is my chance.”
He spent hours at his laptop at his home in Hoonah, finally putting his long-held dream down on paper in exquisite detail for the first time. But the final detail—what to name his guitar venture?—remained elusive.
“Because I am Alaska Native I wanted something that was culturally significant but yet a broad enough statement,” Skeek says.
Then, one day, in a moment of near exasperation, he leaned back in his chair, letting his eyes wander from his computer screen to the window and the forest outside. At that moment, a raven flew into view and perched in a tree.
“Oh my gosh,” Skeek recalls saying at the time. “That’s it.”
With that, an identity was born: “I called it Raven Guitars,” he says. “It’s a very smart bird, and it’s so marketable, too. Anything from acoustic guitar for country players all the way to, let’s say, your most heavy metal hardcore rocker that has makeup on and everything. It suits them, too.”
Photo courtesy of Steve Helgeson
Steve Helgeson crafting a guitar.
Two Guitar Builders Meet
The two guitar builders were among the contest’s fifty-nine entrants. When the twelve finalists were announced in the fall of 2013, both Skeek and Helgeson made the cut.
They were both surprised to see that their own guitar concept wasn’t the only one on the list.
“I’ve got to say, at first I was kind of hesitant. I really was,” Skeek says.
Helgeson says, “My first reaction was to be a little bit disappointed and quite frankly a little bit annoyed.”
Then something happened when they finally met at the Path to Prosperity entrepreneur boot camp, held at a Juneau hotel conference center.
“After we talked, we realized we had the same vision,” Skeek says. “Instead of being competitors, we decided: ‘Let’s try to win this thing.’ It’s quite a fairy tale, if you ask me.”
“And it was also clear that we were both passionate about natural resource utilization and sustainability,” Helgeson says. “And also community and social sustainability. For us those two elements are just as important as our interest in guitar building. We’re both from small rural communities that have seen real economic difficulty. And so it matters to us that our families can have good jobs.”
So it was decided. They would build guitars in Helgeson’s Wrangell workshop overlooking the blue waters of Zimovia Strait, and they would call themselves Raven Guitars. The merger worked. At the Juneau Innovation Summit in January, they were introduced as winners of a $40,000 prize.
How a Cabin Company Captures More Value
Sue and Wes Tyler’s Alaska Legacy Wood Homes and Products won the other $40,000 prize. The Tylers also own Icy Straits Lumber, a sawmill with a devoted customer base that has grown through word-of-mouth since they bought the mill ten years ago.
The cost of doing business has changed since they bought the mill. The biggest hurdle? The rise in energy prices while operating in Hoonah, a remote community accessed only by boat or plane.
“It just changed everything,” Sue Tyler says. “We’ve been trying to think of what can we do to make the business more profitable and be able to handle that increase in fuel. It increases all the costs.”
From the start, Icy Straits Lumber was a value-added business. They had made their mark not by turning out big volumes of 2 x 4s, but by finding the best use for their logs—their products include posts and beams, tongue-and-groove paneling and flooring, and molding and trim.
A logical next step for their business was creating more finished products.
“We want to change our image. We aren’t just a lumber company,” Sue Tyler says. “We want to focus more on the home packages and the cabin packages and the elements those packages are comprised of.”
The reason for their new value-added venture is simple.
“People in these remote communities need jobs to support their families and way of life while adding value to a local natural resource,” Sue Tyler says. “That’s the motive behind the whole operation.”
Their new start-up is called Alaska Legacy Homes and Products, and its early support from Path to Prosperity has been crucial.
“This is exactly what we need. What we need is that technical support from someone who can say ‘Hey, I’ve been there and I’ve done that,’ and help lead us in the right direction,” she says. “It’s one of these things where you don’t know where to start. Who can I call who would care?”
Conservation and Long-Term Jobs
These two entrepreneurial ventures were inspired by a simple question: How to capture more value from a renewable natural resource that surrounds the rural communities of Southeast Alaska?
“If you innovate to extract as much value from those natural resources as you possibly can, you will create enough value to support your community’s economy,” says Mike Skinner of the Bainbridge Graduate Institute, who has consulted with Path to Prosperity. “Having said all that, there certainly are challenges: the cost of energy, the logistics of getting products in and out. I don’t mean to underestimate those. But if you are smart about business, there are things [in Southeast Alaska] that can be done forever, where everyone can enjoy some level of well-being forever.”
This is what inspired the Path to Prosperity contestants.
“I still believe wood manufacturing is a viable industry in these little communities on a small scale,” Helgeson says.
In simple terms, if Raven Guitars matures to a point where it can build one thousand guitars a year, then they’re actually consuming two thousand to three thousand board feet of select musicwood a year to build guitars that may wholesale for $3,500 each.
“One good tree could have a thousand guitars in it. That’s the magnitude of value capture we’re talking about here.”
Path to Prosperity founders say they launched their contest to inspire ventures to create jobs and businesses in rural Southeast Alaska communities.
“At The Nature Conservancy, we believe that entrepreneurs can help lead a community by demonstrating how local natural resources can be used with an eye to the future,” says Norman Cohen, who directs Southeast Alaska programs for The Nature Conservancy. “This is why we founded Path to Prosperity: The future of the region’s rural communities lies in the sustainable use of natural resources.”
Can Path to Prosperity shape the future of communities in Southeast Alaska? Haa Aaní CEO Russell Dick believes so.
“This business development competition was created with a common belief that a healthy community with strong social and cultural infrastructure is the result of innovative entrepreneurship,” Dick says. “This competition can be a catalyst and support network for developing successful entrepreneurs.”
Writer Dustin Solberg manages communications for The Nature Conservancy in Alaska.
Posted: March 31, 2014