Success fits neatly into baggallini

PORTLAND — Years ago, when Dixie Powers went shopping in Thailand, store owners didn't mind if she overpaid by inadvertently using Japanese yen.

"If you handed them yen, you'd be in big trouble," Powers said. "You'd be giving away the farm. Honey, they knew exactly what they were doing."

To avert such goofs, she and other Delta Air Lines flight attendants carried foreign currencies in ziplock bags to keep from mixing them up. Eventually, Powers and a co-worker, Ann Simmons, both of the Portland area, realized a more elegant way to solve their problem — and perhaps make a few bucks on the side — by creating a small bag with five zippered compartments.

In 1996, they began selling the currency bags to flight attendants in staff-only airport lounges. From that low-key start, they built their enterprise, Portland-based baggallini, into a business marketing an array of brightly colored collapsible totes, rolling luggage and handbags with more than a dozen internal pockets.

In the years since, the serendipitous entrepreneurs — Powers' 9-year-old daughter had suggested the company's name — have made out well. By this year, their debt-free company was on track to ring up more than $2 million a year in sales of products marketed mostly through catalogs and travel boutiques.

The founders retired from their day jobs two years ago.

But this year, they realized they might have tapped out their homegrown business expertise and needed more help to push beyond their existing consumer and distribution niches.

In November, the pair hired their sixth employee, Dennis Eckols, a retired Fred Meyer executive, to help reach bigger retailers and spread their sales network.

In less than a month, Eckols has provided the partners with the first precise gauges of their products' profitability and created exacting goals for sales contractors.

"If we were going to grow, we needed someone who knows what they're doing," Powers said.

Similar to many startups, the baggallini founders began with a little of their own cash, product ideas they had gathered from their work and help from contacts they had made in their travels.

Their first supplier was the cousin of their favorite jeweler in Bangkok, Thailand. He manufactured about 100 currency bags to match their first design.

Flight attendants snatched them up. But a problem developed: The bags were glued together, rather than stitched, and they fell apart.

"The coins would bunch up in one big mess," said Simmons, 54. "My heart just sank."

Baggallini's principals compensated their first customers and took to heart their first lesson about the trickiness of supplier relationships. Still, the company went through three more suppliers before finding its current one, a large Chinese contractor. They closely guard its identity.

While they worked on Delta's Portland-Asia flights, the pair got to know frequent fliers Don Santorufo, then chief operating officer for Columbia Sportswear, and Kirk Richardson, a Nike executive.

The men told the flight attendants about the advantages of certain zipper brands. They suggested how to find manufacturers in Asia, and they warned them about harbor-maintenance taxes and other fees.

"Those guys have all been so helpful to us," said Powers, 55. "We couldn't have started without them."

To date, baggallini has never hired a marketing consultant. Powers, who dropped out of Portland State University, and Simmons, who received an education degree from the University of Texas, still dream up bag designs over beers in their homes.

They ask retailers for advice on new products, and they sniff out strategies from competitors and mentors at trade shows.

The hanging tag on each item touts their background: "Designed by flight attendants, approved by travellers."

The business has quickly grown beyond its initial airline-employee customer base, which now provides less than 20 percent of its sales.

The company with the silly name makes some seriously durable, versatile products, said Wendy Liebreich, co-owner of Portland Luggage. Liebreich urges travelers to pack baggallini's collapsible shopping bag, especially handy for bringing back more than they take.

"Whenever I do a packing demo, I always show at least two or three of their items because they are that user-friendly," Liebreich said.

Still, their mass-market potential looked unfulfilled, especially in new markets such as non-travel outdoor and leisure markets, and Powers and Simmons realized they were running out of more precise notions about how to proceed.

The up-from-your-bootstraps approach can work for a while, but it can limit a company's growth, said Mark Paul, a former Northrop Grumman executive who works as a small-business consultant with Synergy Consulting Group in Portland.

"Serendipity is wonderful to start a company with, but it takes a different set of skills to take it to the next level," Paul said.

Eckols was among the pair's informal advisers who helped the company off and on since he met Simmons in 2000.

After retiring earlier this year as a group vice president for Fred Meyer, Eckols decided the baggallini startup would be his next project. As chief operating officer, Eckols shares chores with all other baggallini employees. He helps unload boxes of products, answers phones and talks to potential customers.

But Eckols' management contribution also has made a big impact on the small company. He has helped employees set daily and monthly goals.

He's demanded that baggallini's dozen nationwide sales contractors show evidence of gains.

He's calculated the company's profit margin on each product, including overhead expenses for the first time. He's suggested the firm develop spinoffs of its most successful products and abandon bags with sluggish sales.

The co-founders are heeding Eckols' advice. With sales contractors for half of the 50 states, they are looking to contract enough to cover the rest. Eckols is shooting for $10 million in annual sales in five years.

While sticking with the 1,000 or so travel stores that carry baggallini products, the founders are making inroads onto the racks of G.I. Joe's, Harrods in London and Marshall Field's.

They're poised in the spring to add 12 more products to their 45 main offerings. And camouflage, for bags for outdoors stores, soon will join baggallini's pink and periwinkle palette, possibly expanding their customer base to include more men.

"People always say you should stay focused," Powers said. "We need to go where we see an opportunity."