Cheryl Welch, Peacetree Inc. Founded by Welch in December 1989. "By providing information and resources to its clients about socially responsible ways to tread a little more lightly on the Earth when using paper products, Peacetree allows people to put their principles into action." Sells recycled paper with "high post-consumer content and with reduced or no chlorine bleaching." Recently added print-project management, including posters, calendars and fundraising appeals. Revenues in 1996 $491,000, three full-time employees as of March 1997. Last September, Peacetree was one of 32 winners of the "Astra Award," as given by the Portland-based Gateway to the Women's Market Information Campaign. Birthyear 1958, phone (503) 233-5821, HQ Portland (OR).

Part One: Business And Personal Roots

Frank Gregorsky: Where did the cause come from?

Cheryl Welch: I've always felt the biggest thing wrong with the world is that people don't respect each other, themselves, nature. And I've always tried to do that -- [part of which requires] using resources efficiently. Maybe it started with Girl Scouts: "Use resources wisely" is one of their 10 commandments [laughter]. More recently, where it started? I had worked in the non-profit sector as a business manager for a couple of arts organizations. I was tired of never having enough money or enough resources to do what we needed to do. So I thought I would try a different kind of stress for a while, and be unemployed. While doing that, I worked part-time at another social-service agency, just doing odd jobs for them. They needed something copied. I went to the copy shop and said, "I'd like this on recycled paper."

FG: When was this?

Welch: Probably the Summer of 1989. And they said, "Uhhh, you want to recycle your paper here?" "No, I want this printed on recycled paper." They looked around and said, "Well, we don't have anything." Now this was a large national chain. But in Portland, in 1989, there just wasn't much [for people who thought like me]. Here, of all places, you ought to be able to find recycled paper. One place, out on 92nd and Powell, sold insurance and shipped UPS -- and, if you knew to ask 'em for it, they handled the recycled paper. I thought, "Well, that's not gonna do it." I soon discovered a company called Conservatree in California (San Francisco). Having started in the '70s, they were really the pioneer. They dealt just with printing papers, and you had to buy full cases. So I asked people I knew -- owners of businesses, people in the arts community, and so forth: "If I brought recycled paper here, would you buy it?" "Yeah, that'd be great." I then placed an order for -- literally -- a ton of paper. That's what I had to do to make the shipping [costs] reasonable. After people prepaid for the first order, I had to see if I could get rid of it. The word got out. People started calling me: "You have recycled paper? Where'd you get it?"

FG: What'd it feel like when you started getting those [unsolicited] calls?

Welch: Felt like maybe I was onto something [laughter]: "Yeah, I thought people wanted this." (And I did have people prepay for their part of the first order.) I was marking things up like 15%, because "that'll give me a little bit to cover this and that." But I really had no idea about pricing. I don't exactly come from an entrepreneurial background. I have degrees in math and economics, so I kind of knew the numbers part. But the "reality" part of a business I didn't really "get." So I was just kind of playing it by ear.

FG: It sounds like you had no [formal] mentor, but you must have been bouncing ideas off someone at this point.

Welch: My life-partner at that time, Ann: She and I talked about the concept, particularly the feeling and emotional part -- which is where "Peacetree" came from, in terms of a name and a logo. We came up with those together. But where the business comes from is a peaceful coexistence with trees -- or with nature. We're going to use resources, so we might as well use them as efficiently as possible and not waste what we have. If paper is out there that could be made into paper, why not use that before we cut down new trees? Ann helped me on one side of it. But, as far as a business mentor, I didn't have one at the start, which is kind of good and kind of not: No one told me, "Nobody does it that way." Because I didn't know any better, I'd go ahead and try something.

FG: You didn't know what you didn't know.

Welch: Exactly. Nor did I have a year's worth of savings, or three years of experience in the industry. I had credit cards, and those are what I financed it on.

FG: How much credit-card abuse did you have to engage in?

Welch: Oh, maybe $5,000. The nice thing about this business was that usually I could get the orders first and then buy the paper. It wasn't like someone with a restaurant having to put in tens of thousands before [the first paying customer] walks in the door. I really could build it slowly.

[Cheryl grew up in the farming community of Caldwell, Idaho. Siblings? One brother, six years her junior, and she "didn't have a real close relationship with him." Their father worked for a seed company -- "so, even as a child, I got an appreciation for the land." Dad was also skilled in math and they would play numbers games in the car. "I don't remember ever being told, you can't do that, you're a girl." Her most rebellious period was around 13, but the symptom was "moodiness" rather than drinking or drugs. Back then, she also disapproved of her mom staying home, whereas today, "I'm glad she was there for what we needed as kids..." Cheryl did very well in school and maintained a 4.0 average thru high school. In college, she began questioning her sexual identity and, as a freshman, decided not to attend any church. This was the opening alarm bell for her folks...]

Welch: After that first year of college, they made me come home and work in my dad's business.

FG: And how did they talk you into that?

Welch: Uhh [laughter], they told me I needed to do it, and I said okay. Actually, you could say they "talked me into it" by paying for my education. It wasn't until my senior year of college, when I did come out to them as a lesbian, that they stopped paying [laughter] -- which meant I had to figure out how to pay for my last year.

FG: They were totally surprised by this? They had no inkling?

Welch: By me being a lesbian? I think they had an inkling, but they didn't want to admit it. My mother was especially [upset]. My parents have always worked as a team and my mom was usually the one who wrote to me at college. She stopped writing; she stopped communicating. My dad would send me a note every little while, with a $5 bill saying, you know, "Go have pizza with your friends." What he said to me later is: "I just don't want it to be hard for you, and I'm afraid it's gonna be hard for you." Mom felt it was more of a moral wrongdoing.

FG: What about going home for the holidays these days?

Welch: First, I don't go home for the holidays. And, when we do see each other, we kind of ignore things -- we just don't talk about it. My parents don't ask about my partner. I'll tell them she said to say hi, and they'll go, "Oh, okay." My dad'll ask about her occasionally, but -- it's just really hard for them, still.

[After college, new to Portland, Welch did lifeguard work for awhile, followed by three years at John Hancock Insurance "processing medical claims." At age 25, bored silly, she took an unpaid leave and went off to a cabin to contemplate, "What am I gonna do?" Shifting over to a women's theater company in town, she began a year of working as a 1ighting designer: "I liked the creative part of it as well as the mathematical part: Here are the angles and this is what needs to happen." But she lacked the skills to get the big assignments and the competition for them was already stiff. She then fell into being a business manager for Echo Theater, which lasted three years, followed by nearly as long handling the same kind of functions for the New Rose Theater. That brings us up to '89 and the birth of Peacetree...]

Part Two: What Do You Measure Yourself Against?

FG: Describe the initial set-up, physically.

Welch: A little apartment in southeast Portland, with a computer in the bedroom. The first order of paper, the semi pulled up looking for a loading dock [laughter]. But we put it on my back porch -- about 40 cases of paper. This took place in November, and yes it's amazing it wasn't raining. The porch was enclosed, and the paper was fine. For close to a year, I did that, just out of my apartment. And, if somebody wanted a $5 ream of paper, I would drive clear across town with it in my little car. Then I got to realizing that expenses were a bit more than what I thought, and the margin needed to be bumped up a little --

FG: How did you feel about that?

Welch: Well, that was hard. This business has been motivated a lot by moral and ethical standards -- so I don't want to, you know, screw anybody over. Didn't want to be charging "too much." I also wanted recycled paper to be as close [in price] to non-recycled paper as possible. Back then, it wasn't. The paper that was available at all was pretty much the commodity paper (like copy-paper, lined pads, and so forth). That kind of paper is still usually a little more expensive than non-recycled, whereas printing paper is now less expensive -- but there wasn't much printing paper then. We finally instituted a delivery fee for orders under $25. Then we moved that up to $50, and now it's at $75. And some people are really upset about this: "Whaddya mean I have to order that much paper?" Well, you know, I'm sorry, but we can't be everything to everyone. Today we mostly deal with people who are doing printing projects, and we handle everything from design to delivery. Paper [is now just] a part of what we do, and the whole process is done with as much environmental soundness as possible. But it's true: People can no longer walk in and buy 50 envelopes. "We only sell 'em by the box." And that's hard, you know, because they can't go to any other place. For a long time, I was that place -- the place where people could get little bits of stuff -- and I felt good about providing that. It's been a continuing struggle -- this search for balance.

FG: Several people I've interviewed want to talk about strategy and positioning. Their industry naturally has other players, which means they've gotta find their niche, learn from the mistakes of people who've gone before -- -things like that. But it sounds like your "positioning," in '89-90, was really a vacuum. You weren't measuring yourself against anyone because no one was doing the thing you wanted to start.

Welch: Exactly -- which has been, again, one of those positive-negatives. A banker will ask, "What's the usual margin for businesses like yours?'' Well, there isn't any. First, no one did strictly recycled paper. Now, of course, we've added the broker aspect. And most brokers are just single people working on their own -- they usually just stick to the printing part -- whereas we handle a much wider scope: I have employees, we do delivery -- I don't know of anybody else doing things the way we do.

FG: That's an amazing statement after seven years.

[Having heard how doing so would be completely pointless for a business any younger, Welch approached one banker during her fourth year, and was told, "You're nowhere near." Okay, but what would be "near"? "He probably wanted the two-to-one asset ratio -- asset-to-liability -- which I still don't have," she admits good-humoredly. The other roadblock: "I didn't have any collateral; I didn't own a home at that point. Inventory doesn't count. And cash-flow -- accounts receivable -- doesn't really count."]

Welch: In the meantime, banks got very competitive about wanting small business [accounts]. U.S. Bank offered me a line of credit -- $5,000. So I took that; the interest rate was about 12%. A couple of years later, Bank of America [where I'd long banked] did the same thing, so I got a $10,000 line-of-credit from them.

[Until 1991, Welch ran the business from her apartment and kept inventory in a U-Store-It warehouse. Then she set up shop in a "business incubator" in northeast Portland, staying for a couple years. "When Tektronics, the anchoring tenant, went back to Beaverton, this put everything in jeopardy." But the city decided to make sure none of the small firms was too badly hurt, which led to $2,000 in moving expenses for Welch, along with a $12,000 from the Portland Development Commission at a nice interest rate. "I worked hard to get them to give me that loan -- and this year, in the next couple months, I will finally pay that loan off."]

FG: Can you name a time since December '89 when the situation was really make-or-break? When everything seemed to be on the line?

Welch: Well, yesterday for example [laughter]. I guess [pause] I have never felt as if I'm gonna "lose the business tomorrow." But neither have I felt like, "Phew, I'm out of the woods."

FG: Sounds like a general anxiety level as opposed to pinpoint pain.

Welch: It's a continuing level of stress, yeah [laughter]. Our assets-to-liabilities are still pretty much one-to-one. I pull money out of the business when I can -- that's how I've paid myself. I'll say, "This is what I'm gonna pay myself." But, if that money isn't in the [company] checkbook, I don't. In fact "incorporating" is probably good for me [personally] in that I am now an employee and will get a regular paycheck. So I still sort of feel on the edge, but in a good way -- you know, on the edge of [short pause] breaking it open. This [enterprise] needs to be more than just "okay," which is what it's been for seven years. Otherwise I need to [go off and] do something else.

FG: Has there been a point where you've considered giving away a chunk of the ownership for any reason?

Welch: I've always been very opposed to that -- I guess I like the control [laughter].

FG: Well, but [what about] 80% [control] as opposed to 100?

Welch: Well, even so. It's funny, but -- and I haven't really analyzed this totally -- I do want people to participate. Yet I don't really want to HAVE to consult with someone [in particular] --

FG: You're very honest, thank you [smiling].

Welch: -- if I want to do something. Not even my partner. She has said, "Do you want me to give you $5,000 and I'll take a percentage of the company?" "No. This is my baby." That's how I feel. This is my project. I've built this from nothing, and don't want to give it away. I've read about, and have considered "intellectually," giving away a percentage to some investor. But, really, I have never considered giving it to someone I don't even know.

FG: Given what you indicated earlier [about looking for a breakout to fast growth], you'll soon face one of the classic entrepreneurial forks in the road -- or maybe two. One is sharing of control. The other one is, when you don't want to share control, then you personally have to take on lots of debt, to finance this breakout, this expansion. And both of those you're blocking against.

Welch: You're right!

FG: The only other route [to a breakout] is to do lots of brainstorming, lots of reading, based on some of the revolutionary business [innovations evident] in companies big and small. You might almost have to redefine this industry again, so you can earn a high margin doing something that no one else seems to have thought about. That way, you could earn the money in profits without having to give away control or go in hock for 40 grand to a bank.

Welch: Um-hmmm. Well -- yeah. I AM looking for the breakout, and if that doesn't happen, then --

[Discussion of Peter Drucker's book Innovation And Entrepreneurship and playing with questions like: What will U.S. environmentalism look like in 2012? What sector will take off by then that we're not even looking at? Where's the niche not now being served? Drucker's book offers seven categories of entrepreneurial opportunity with examples, from business and technological history, of how each can be exploited: "Usually, they do not bring about the change themselves," the author stresses -- [still, the] entrepreneur always searches for change, responds to it, and exploits it as an opportunity."]

Part Three: "The Issues," 20 years Ago versus Now

FG: I'm a conservative, but I try to be objective about large social trends. And I look at the Feminist Era as roughly 1970 -- when the four blockbuster books came out -- to 1983-84, when Geraldine Ferraro's candidacy fizzled, the ERA lost [for the last time] in the U.S. House, and the "Comparable Worth" concept was depth-charged by a Rand Corporation study. So we had a stretch, roughly from the time you were 11, to the time you were 27, which could be called the feminist era of the baby-boom generation.

Welch: Yep.

FG: How did all of that affect you? What do you think about that whole sequence?

Welch: [Five-second pause] Well, I guess the early part of it kind of fed in to what I got from my family -- which is that I didn't have limits because of being a girl. Nobody ever said you can't do science, you can't do math, because they are not "feminine" fields --

FG: Or you don't need to go to a good school, all you need is a two-year degree [because you probably won't use it anyway]. Never any of that?

Welch: No. I got none of that from my parents, plus socially that [sense of liberation] was building so I wasn't [feeling blocked] there either. In college, I took this to a more militant stage -- certainly more so than now. "Godammit, I'll do whatever I want to, you can't keep me down." Another thing this did to me, though, which maybe is a detriment, is that it made money [seem somehow] "not okay." You know, in the feminist movement, it was not okay to have a lot of money. Instead it was sort of chic to be downtrodden [laughter]. And some of the later behavior -- my saying "Okay, I'll mark this paper up 15% and that will be fine," not even thinking about costs or, God forbid, profit -- was instilled in me [during the 1970s]. It's something I've kind of had to dig myself out of.

FG: Still, feminism spoke to you at key levels.

Welch: Yes, it did -- and in a way so basic I don't even know. It's really a big part of who I was and who I am. But [pause] it's way different for a woman now, for lesbians now, for just kids in general.

FG: Other than each generation [insisting on] doing something different from the previous generation -- is it that simple? Or is something else going on?

Welch: I don't know [sigh]. As with a lot of movements, some real progress was made, and it IS easier; there isn't as much discrimination. Or at least it isn't as blatant. I certainly haven't done enough research to know whether it's still there in as big a form or not. I don't know [philosophically].

FG: Any political people, national or state, that you worked for during the 1970s? Environmental activists? People you looked up to?

Welch: No, I was not particularly involved in political campaigns, as far as [candidates]. It was more around issues, especially around gay-rights issues. When I was in college [up in Tacoma, WA], one big issue [triggered a] full-page ad in the Seattle paper -- I contributed and my name was in there. That was a pretty public thing to be doing. Not that I was hiding from anybody, but I [generally did not] put myself "out there." So I was not really active with particular politicians, but more around particular issues.

FG: Anything you want me to put on the record involving current public policy, state or local? The three zones I usually use to open this section are taxation, regulation, litigation.

Welch: Okay [sigh]. A few things are near and dear to my heart right now. Last year a guy who owed us $1,500 said he would be declaring bankruptcy, and we wouldn't be paid. A couple of people didn't pay, over the years, but [their sums were small and this case was big]. First, he had filed bankruptcy two years before, so he couldn't file again so soon -- and he hasn't, and I've taken him to small-claims court. He didn't show up, and now we're trying to garnish his wages. Because he [thumps the table] started a new business! We located this new business, and [my partner] went out to make sure it was him. He told her: "I don't owe you anything, I'm free and clear, I filed bankruptcy." She pointed out that he didn't. He said, "Well, I would have, but I couldn't afford it."

FG: [Derisive laughter]

Welch: His idea is he doesn't owe us a thing -- which really pisses me off. It's his attitude [that makes me fight him]. Not only has bankruptcy filing become too easy to do, but there's not even any stigma about it any more. "Oh, file bankruptcy, no big deal." This is just amazing to me. If someone is in trouble because something happened to them, I understand the concept: [After filing], they can get on with their life. But that's not how it's being used anymore.

FG: What about the costs of pursuing him?

Welch: To file in small-claims court only costs $35, and I got the judgment for that, plus an extra $50. So right now he owes me $1,585. You're supposed to have a lawyer to do this writ of garnishment, but I talked to a friend of mine who is a lawyer. She said get form number whatever, I filled it out, and she said, "Yep, looks good." His business is incorporated. Whether he owns it or not, he's an employee, so he's getting wages [and they] should be garnishable. We'll see.

FG: What about taxes? All business-owners have one tax that really drives them bats. Any particular one that sticks in your craw?

Welch: Well, you know, it's interesting to me that I pay several thousand dollars a month in employment taxes -- yet there's only four of us. A lot of it goes into Social Security. But I don't really expect to get much benefit from Social Security. So that's a lot: Everytime I have to write those checks, it's like, "Whoa."

Part Four: Gaps Are More Generational Than Gender?

Welch: I don't know if this is being age-ist, or if it's really true. But it seems like younger people -- some of 'em, anyway -- have a really different idea of what it means to have a job. And also of what "work" is and what they "deserve" -- simply because they exist -- versus what they need to earn. This has become a problem around here.

FG: By young, you mean twenty-somethings?

Welch: Late twenties to maybe early thirties.

FG: Part of that is the so-called "have a life" doctrine of the Xers: "You want me to stay and work till nine o'clocktonight? Get serious, man." That sort of thing.

Welch: Yeah.

FG: Or is it something more that you are addressing?

Welch: That's certainly one of the ways its manifests. But also, "You're wanting too much from me. Nobody can do this better than I'm doing it." I expect a lot from myself -- but I try not to expect that much from other people, because other people should have a life. Work is not everything. I [also] know I cannot "motivate" someone else. It has to come from inside [of each person]. But here's what I'm trying to figure out: What can I do to set up a situation where somebody will want to work 'til 9 tonight? You know, not every night, but because something special is going on --

FG: The mailing's gotta get out!

Welch: Yeah. Yet I've gotten a lot of -- hostility, I guess. And I feel like I'm trying to be genuine, trying to be respectful. I'm trying to make this work for all of us, "and you're givin' me shit!" [Laughter] What I hear back constantly is, "I'm doing all I can. If that's not good enough for you -- "

FG: A lot of people will react [that way out of human nature] -- just to protect their autonomy. But do you think [some greater] principle is at stake here, on their part as well as yours?

Welch: Um [sigh] -- Yeah, I guess I think so.

FG: I think there is too, but it's hard to get a handle on it.

Welch: Yeah, I can't say exactly what's goin' on. But it's hard, when I'm trying to be very genuine, to understand why it elicits that kind of response.

FG: Try reading Thirteenth Generation by Neil Howe and Bill Strauss, which is really about the Xers (the authors were trying to rename them). It is the funkiest, most brilliant book -- [a solid primer on] Generational Theory, but really about this tension between the Boomers and the Xers. Their whole generation rejects our idealism, our [change-the-world] approach to politics -- whether it comes from Newt Gingrich or Hillary Clinton -- and our sweeping attempts to bring perfection to the world. People between the ages of 18 and 35 don't want to hear any of this crap; they see us as the Woodstock Generation who left behind big messes for them to clean up. They'll do that messy work, but in a bottom-line way -- and they don't want to hear any more of our "cause" stuff.

Welch: Yeah. Yep.

FG: On the other hand, the people who come to work here must have some connection to [this] cause, somewhere.

Welch: Exactly. And everyone here would claim as much -- and has. "What do you like about working here?" "Well, it offers something I can believe in." I mean, nobody started working here for the big bucks! Instead, it was something that they felt good about doing.

FG: Maybe it's the simple fact of boundaries that is the huge generational difference. Boomers are willing to just submerge the boundaries, and just make work fun, and fun into work -- we can go on for years that way.

Welch: Um-hmm.

FG: They don't do that.

Welch: Yeah. And [in the case of that one balky sales manager], I finally did leave her alone, after saying: "These are the [1996] numbers you have to bring in." Didn't happen. This year, I asked for client plans; I asked her to be in the office these particular hours; and "when you're out, fill out reports about what you did with your day." That didn't go over well. But she's doin' them.

FG: How close did she come to the '96 target?

Welch: Eighty percent, and definitely a big increase over the year before. So she's going in the right direction.

FG: Are there "gender gaps" in the environmental movement?

Welch: [Ten-second pause] If there are, I think they're FAR less pronounced than in most other industries -- because it's new, and because it is a more "cause-based" industry, which women have been attracted to. I can think of some things -- actual recycling operations, having a lot to do with machinery, and therefore needing big bucks -- with more men involved, given [the need for] that sort of knowledge, aptitude, interest or whatever.

FG: I would also imagine that the industries which have been the problem for environmentalists -- paper, steel, mining, chemicals -- tend to be the macho industries [going back thru the decades].

Welch: True. Male-dominated, yeah.

FG: And so the sectors that rise up in opposition to those industries are going to have a different culture entirely.

Welch: Right -- that makes sense.

FG: How do you, either as a citizen or a businessperson, relate to the hard-line environmental groups? Not just tree-spikers, but people who [still speak in the polarizing tones] of the 1970s? People who would prefer to shut plants down, not just move paper around.

Welch: Well, I guess I'm glad they're out there. Because not only are they there, but [you find similar strongwilled] people at the other end of the spectrum too: Hard-core conservatives [who declare, in effect]: "We will cut down trees at all costs and forget who's living in 'em." That's just never where I have been.

FG: Stylistically and ideologically? Or just in terms of style?

Welch: I think both. I see my role in the world as being able to merge two different [sets of attitudes]. What my business does is make available resources to people who are interested. But I've also talked to [key people] who didn't really get why they should care about this. And, because I'm not as scary as one of the tree-spikers, because I can and will acknowledge how, for example, retooling a mill is expensive -- I get that part, too -- I help move things along by merging those worlds. I like it when people can see things a little more clearly and then head off in a common direction, as opposed to fighting each other.

FG: So you sound like not a polarizing person at all.

Welch: That's true. I would rather work with someone than against them. And sometimes that's not always possible -- which gets really hard, because then I don't know what to do.

Related Links:

• Discovery Institute
• Joint Economic Committee
• Women Business-Owners in Post-Corporate America