From the March 1999 issue of Entrepreneur

Everywhere we went, people told us it couldn't be done-- and that if it could be done, it would've been done by now," says Willy Paterson-Brown, 33. But Paterson-Brown and his brother, Tim, 38, weren't discouraged by the naysayers. The Scottish-born entrepreneurs attacked the task ahead of them with the underdog fervor of David challenging Goliath--carving out a place for their upstart company among the tissue industry's biggest players.

Seattle-based Linters Inc., the company the brothers founded in 1994, is the maker of Purely Cotton, the world's first and only 100 percent cotton tissue products. The bottom line? Last year's limited regional distribution of Purely Cotton products brought in sales of $14 million, and the brothers estimate that the deployment of national distribution later this year will triple their company's annual sales.

Willy and Tim could sense from the beginning that they had a winner. After all, America is crazy about cotton, from wearing it to sleeping on it. And why wouldn't health-conscious and environmentally aware consumers take just as keenly to the use of a less-abrasive renewable resource in their facial tissues and toilet paper? And here's the kicker--it's not toilet paper at all. Goodbye, wood pulp: Says Willy, "The beauty of the raw material of cotton is it's just so much better for the skin."

Square One

Born and raised in Hawick, Scotland, the brothers' careers in the United Kingdom ultimately led to a joint venture in the United States. "We both started off [building] strong corporate backgrounds and then branched out on our own," says Willy. "We were both able to get into business for ourselves [in Scotland] and [then sold] those businesses at roughly the same time."

They were playing a game of golf one day when it hit them: Why not pursue their next business venture together? "We felt it would work well because our strengths and weaknesses were in different areas. Tim's strengths were more in corporate finance and in strategic areas, and mine were more in sales and marketing," says Willy. "So we pooled our resources."

In their search for a new business, they each heard separately about a company in London called Multi-Soft PLC: One of Tim's former colleagues mentioned the company to him; meanwhile, the brothers' mother had also heard of the company and she mentioned it to Willy. "`You're the sales and marketing guy,' she told me. `Why don't you have a look at it?'" recalls Willy. "When I talked to my brother about it, he was amazed. `Somebody was just telling me about that company,' he said."

The group of investors that then owned Multi-Soft had purchased the concept of a disposable tissue made from raw materials other than wood pulp from a student who said he had thought of the idea while he was traveling through China. "This chap thought it could be done and sold the idea to the investors for roughly $30,000," says Willy.

At the time the brothers contacted Multi-Soft, the company was looking to raise funds and had a low-quality prototype made from 50 percent straw and 50 percent recycled denim jeans. In early 1995, the brothers found equity partners and raised the $1 million they needed to purchase Multi-Soft. Then they privatized the company and moved it to the United States.

Still, the brothers had no marketable product. "We went back to the basics, and instead of trying denim, a recycled textile, we went straight to the raw material," says Willy. They found they could use the short fibers of cotton, known as linter, and with the help of a chemist, their quest for the perfect formula began.

Not a Square to Spare

Discouraged by some and encouraged by others in the tissue industry, Willy and Tim knew it would be a long, hard road. "But if we could do it, [we knew] there'd be a market," says Willy. They subcontracted with various paper manufacturers for the machine time needed to experiment with their formula. Their first sign of hope came at the end of a particularly grueling 16-hour session.

"We'd bought machine time for a period of 24 hours and had to clean the machines out before we put the cotton mix in. We ran it time after time, but we just couldn't get it [right]," Willy says. The weary team had been working since first thing that morning. By the time things finally appeared to be looking up, it was 11 p.m.

"But [just after] something that sort of looked like tissue came off, a crashing sound almost like thunder rang throughout the factory," Willy says. The machine ground to a halt as smoke filled the air and billowed out the windows.

They'd produced the equivalent of about one square of tissue, says Willy. But it was a start. They left and celebrated the night's progress over beers. "It was extraordinarily exciting to have produced something right at the end," Willy says, "and we knew where to start next time around."

Sure enough, the next time they ran a formula test, they produced their prize within three hours: an all-cotton tissue with some quality. "We were finally vindicated," says Willy.

One hurdle down, plenty to go. Manufacturing was the next big challenge. "You can't go to the top manufacturers, because they own 85 percent of the market and they're not going to support a new, unique company," says Tim. Instead, Linters identified several smaller, independent manufacturing companies that weren't worried about conflicts of interest and that had the engineering expertise to produce all-cotton tissue.

As the partners continued to improve their formula, the next task was to move toward the marketplace. Backed by positive results from more than $1 million in blind in-home studies, and clinical tests for abrasion, absorbency and toxicity, marketing proved easier than anticipated. Says Willy: "Of the first 14 retailers I made presentations to, 14 of them said yes."

Sales of the Purely Cotton line in Texas test markets in 1996 reached $70,000. In 1997, with expanded
distribution throughout the Pacific Northwest, the company brought in $2.5 million from stores such as Albertson's supermarkets and Rite Aid drug stores.

Squaring Off

Purely Cotton was on a roll, and Willy and Tim were carving a niche for their company in the midst of such giants as Kimberly-Clark and Procter & Gamble. "We try to be creative in both our supply arrangements and our marketing strategy so we're not knocking heads and being an irritant to the big people," says Tim.

Also key to Linters' strategy is differentiating itself from being just another "me too" product on store shelves. While wood-based tissues are all marketed solely on softness and price, contends Willy, "We try to sell Purely Cotton based on its benefits and attributes." Among the benefits? "Tests [comparing cotton and wood pulp] found that our tissue was the least disruptive product [to the skin] as a result of having a different chemical content," he says.

The company's growing sales have been fueled by not only the brothers' devotion to the all-cotton concept but the duo's equity philosophy as well: It's not about 100 percent ownership, says Tim. "We've surrounded ourselves with [equity partners] who are far better than we are in pretty much every capacity of the business," he says of the $20 million in investment capital the brothers have raised to date. "Our role is to strategically plan the best enhanced value of the business."

"We don't want to suffocate the company by not realizing its potential," agrees Willy. "And if that means diluting [our percentage of ownership] to bring in the equity that's required, then we're prepared to do that."

Having achieved their initial innovative breakthrough, the brothers believe many possibilities lie ahead for Linters Inc. Full nationwide distribution will be complete later this year. The product line will soon grow to include such items as paper towels, napkins, feminine hygiene products--even baby diapers. They hope to turn last year's sales of $14 million into a dazzling $50 million this year.

And what does their mother think now of the idea she casually tossed to her sons? "She's a very happy shareholder," says Willy. In a family where both parents are retired doctors, their late grandfather was a surgeon, and an elder brother and sister are also physicians, it appears Purely Cotton has brought the brothers as close to things anatomical as they're going to get--a source of humor for the family.

Together, the pioneering duo has come full circle: "Purely Cotton [presents] an opportunity for going beyond America into Europe as well," says Tim. "It's been a lot of fun putting the pieces together."

Contact Source

Linters Inc., (800) 372-SOFT, http://www.purelycotton.com