Useless turns useful with Alchemy

Scavenging through rows of beat-up cars at a wrecking yard near Boeing Field, Eli Reich looked for the perfect materials for the messenger bags made by his company, Alchemy Goods.

"This is just long enough," Reich said as he cut and examined a seat belt from a mangled Toyota Tercel before moving on to the next junked car.

Reich's two-year-old company turns the "useless into useful," he said, by making environmentally conscious products from materials about to be dumped in landfills.

Inner tubes from old bicycle tires are used to make the bags, and seat belts stripped from junked cars are used as shoulder straps. The company struggles to build a profitable enterprise while focusing on sustainability.

"Every day, you can make the decision to have a sustainable product or the cheapest product," Reich said.

Reich tries to make the messenger bags from as many recycled parts as possible. Because each bag is unique — made by hand from different recycled materials — he says it can take several hours to produce one.

Adding recycled items for even the smallest parts of the bags — like the zippers, which come from used inner-tube air valves — can make the process more arduous, Reich said.

And while not every single part is made from recycled material (the colored inside linings, for example, aren't), Reich says he tries to put sustainability and Alchemy's philosophy before hasty production when he makes any decision about the business.

Creating a successful small business is a daunting task, but companies like Alchemy Goods face special challenges, small-business advisers say. Those that make products based on environmentally friendly technologies can have trouble getting financing, said David Young with the Small Business Development Center in Seattle.

Lenders are often tentative about pouring money into a product that uses new technology or techniques that have not proved profitable in the market, Young said.

Some companies that focus on innovation simply fail, he said, or their new technology is never completed. That can scare off loans.

But there are community lending groups that focus on helping companies like Alchemy. One, Cascadia Revolving Fund based in Seattle, is a nonprofit group that lends money to small businesses owned by low-income minorities or women and businesses that work to preserve or restore the environment.

Shaw Canale, Cascadia's executive director, said the organization was formed to help business owners who historically had trouble getting traditional bank loans.

Alchemy Goods is in the same position as many small organic farmers, Canale said: Products are more expensive to produce, so it's more difficult to compete in the market. Reliable buyers are harder to corner, too.

Small businesses that have developed innovative ways to build products need to pay attention to larger companies that could buy them out, Young said.

These companies often spend too long in the development process and not enough time securing buyers and marketing, so they don't have a market base when a larger company wants to take over, Young said. Without a strong market base, they won't be able to compete with larger vendors and will likely be forced to sell for less than they could get with a solid base.

Companies like Alchemy Goods should "do as much business as they can within the market reach they have, and then if they still have room to grow and can attract the funding to do that, then they should," Young said.

Alchemy Goods was created a little over a year after Reich's own messenger bag was stolen. Reich said he has always tried to be a conscious consumer and buy environmentally friendly products.

When he didn't find the kind of replacement bag he wanted, Reich said he grabbed some old inner tubes from around his house and made one.

"Whoever it was that stole my bag — you were the inspiration for my imagination," Reich wrote on the company's Web site.

In 2004, Alchemy Goods sold 175 bags — its first year of business; 2005 sales were on track to double last year's.

Reich works a fairly normal schedule, at least eight hours a day, and last summer hired his only other full-time employee. He visits landfills about every other week and has agreements with several local bike shops who save used inner tubes for him.

Reich wouldn't disclose specifics about sales or profit because fear of getting bought out has him constantly on edge, he said.

"The vulnerability comes from the fact that I know I'm not a seasoned businessman," said the former wind-energy consultant. "I've never been to business school. It does cause me a little undue stress, because I'm worried about the competition."

Reich says it takes him about three hours to make a standard messenger bag that sells for $128. A larger company, he expects, could make a similar product cheaper and faster.

"The big challenge is prices to make the bags affordable," Reich said. "What makes it the most challenging is that labor is really expensive."

Although the high cost of labor means Reich's bags cost more than others, he wants consumers to have a choice between buying a sustainable product and one that could be more harmful to the environment.

And a big company, Reich said, would be less likely to keep Alchemy's sustainable mission.

The messenger bags aren't the only sustainable items in Reich's business. Used soy-milk containers hold all of his tools. His business cards are made out of the same recycled rubber used to make the bags.

He hopes Alchemy's philosophy will spread and help change the culture of the entire market, a culture he says stresses cheap production and environmentally unfriendly practices.

Reich seems more dedicated to sustainability than to making a lot of money, but he is constantly looking for materials headed for landfills that could make other products.

"Some of the buckles could be useful," Reich said after he took the seat belts out of a Nissan Maxima. "I've got a couple experiments there."

Go to www.alchemygoods.com for more information about products at Alchemy Goods.