Makeover helps firm see green

In response to several cases of cancer in their families, Gene Martignetti and Jon Mostrom started Simply Organic Beauty in 2001 to peddle what they regarded as safer hair-care products containing no chemicals.

It was a logical choice, given Martignetti's long experience as an executive of several hair-care products manufacturers.

But then their supplier went bankrupt and a key overseas customer defaulted on a sizable bill, draining the Eden Prairie business of precious cash and the otherwise busy founders of their patience.

By the end of 2002 there were few, if any, sales.

So the dads weren't all that optimistic when their sons, Jeremiah Mostrom and Gino Martignetti, graduated from college in 2003 and proposed that they license the company's name and product line.

"I told them they'd learn a lot, but I didn't think they could make it go," said Jon Mostrom, an Eden Prairie accountant.

As it turns out, the kids could teach their dads a lesson or two. In just four years since they started late in 2003, the whippersnappers built sales to $1.4 million in 2007. Better yet, revenue in the first six months of 2008 was more than double year-earlier levels and on track to approach $3.7 million.

Jeremiah and Gino, both 27, are diplomatic about the turnaround: "The organic movement was just getting started when our dads started the company," Jeremiah said. "Now organic is more mainstream, and we've benefited from that."

It helped that the lads also made some shrewd decisions, including changes in the distribution system, broadening of the market focus and expansion of the product line.

It all started after a case of leukemia struck Gene Martignetti's son Corey, prostate cancer infected Jon Mostrom, and breast cancer attacked his wife, Jonnie. All three are cancer-free now, however -- the Mostroms after surgery and Corey after a bone-marrow transplant from Gino.

While no one suggests that chemicals in hair-care products had anything to do with the cancers, it was the business the elder Martignetti knew best. So he teamed up with Mostrom, whom he had met when their sons were teammates on the Eden Prairie High School football team, and began the search for organic hair-care ingredients.

They came up with such items as olive oil for moisturizing, honey for sheen, tree sap for hair strength and olive leaf extract for antibacterial and antifungal properties.

Gino and Jeremiah, armed with a $25,000 bank loan, moved quickly to turn things around. Their first move was to drop the company's large distributors, which had little incentive to push the products of such a small client. Instead they opted to sell directly to beauty salons, initially with smaller-sized product containers aimed at salon customers.

But it wasn't long before they expanded the line to include "professional" sizes for salons to use on their clients.

The result is a growing lineup of professionals such as Michele Nadeau, proprietor of the Jaide salon in south Minneapolis, who not only are retailing Simply Organic products to their customers, but are using them exclusively in their business. She offered several reasons for the choice.

Simply Organic products "fit our philosophy of how to do hair," Nadeau said. "It should feel natural when you're done, not like a wig, all gooped up." Moreover, "the results are superior in shine and frizz control," she said.

But the longer-term benefit is the all-natural makeup of the product, she said, because "some of the chemicals in consumer products can cause health problems."

The upshot: The professional line now accounts for about 40 percent of the company's sales, Jeremiah said.

Martignetti and Mostrom also have worked with their North Carolina manufacturer to expand their offerings beyond shampoos and conditioners to a line of gels, creams and other styling products for the professional trade.

Perhaps most important, they also solved the problem of an all-natural shampoo that wouldn't lather. Their answer: a sugar-based ingredient that doesn't produce quite as much lather as a regular shampoo, but enough to make shampoos their biggest seller.

The two young entrepreneurs promote their products with appearances at trade shows, articles in trade magazines and a group of eight regional sales reps who are a tad more attentive now that the organic movement has gained traction and Simply Organic's sales are growing swiftly.

And it hasn't hurt that the company has developed a following among the stylists of Hollywood celebrities, including Gwyneth Paltrow, Parker Posey, Ben Stiller and Robert Downey Jr. Indeed, the California market has become important enough that Martignetti is based there to see after a major client.

And the dads couldn't be happier: "There is nothing better for a father than watching his son grow and succeed before his eyes," said Gene Martignetti. "Jon and I are so proud of what they've done."

Jon Mostrom agreed: "These are two amazing, incredibly hardworking young men," he said. "I can't believe what they've accomplished."

Dick Youngblood • 612-673-4439 • yblood@startribune.com