Gaiam offering customers first chance at IPO stock

BROOMFIELD Customers who helped Gaiam Inc. become one of the nation’s fastest-growing private companies will get an opportunity to benefit from the company’s success.

The Broomfield-based provider of information, goods and services based on values of ecology, natural health and personal growth filed for an initial public offering in July seeking to raise $10 million by selling 2 million shares at $5 per share. Headed by Boulder entrepreneur and Corporate Express founder Jirka Rysavy, Gaiam will trade on Nasdaq under the symbol GAIA.

This is the first offering of this kind, an underwritten offering where the underwriter will allocate shares first to Gaiam’s customers plus allow customers a 10 percent discount on the first 200 shares, reducing the customer price to $4.50 per share. Typically individuals are unable to get into the market ahead of larger institutional investors.

“There’s always a portion of the shares offered to someone,” says John McFerran, a broker at Paine Webber Inc. in Boulder. “In this case, they are trying to offer a special perk to their customers.”

Customers interested in purchasing stock must complete an application to open a brokerage account at Tucker Anthony Cleary Gull. Customers can indicate the number of shares they would like to purchase on the application. The minimum order must be 50 shares, and payment needs to accompany the application when submitted. Shares are expected to go on the market in October.

Between 1996 and 1998, Gaiam’s revenues leapt 107 percent from $14.8 million to $30.7 million, according to the registration statement filed with the Securities and Exchange Commission.

Inc. Magazine in 1998 ranked the company as one of the 10 fastest-growing private companies in the United States. Gaiam is the parent company for Harmony, a direct marketer of environmental products everything from outdoor furniture to solar radios to recycling bins to eco-friendly household cleaners. Gaiam is also the parent for the natural health marketer, InnerBalance, and a producer of Yoga videos and information, Living Arts.

The company reported that its customer base grew from 300,000 at the end of 1996 to 685,000 at the end of 1998 to 800,000 as of June 30. Gaiam markets its products through the Internet, catalogs and retailers such as Borders, Target and Musicland.

According to the filing, Gaiam focuses on the LOHAS Market (Lifestyles Of Health And Sustainability.) Gaiam believes it is the first company to recognize that this value system should be viewed as a separate industry that may approach $200 billion in the United States alone in the year 2000.

Rysavy, a Czech immigrant who was named Entrepreneur of the Year by the Boulder Chamber of Commerce’s Esprit awards in 1996, is founder of office products provider Corporate Express, which he grew from $30 million to $3 billion in five years. A year ago he passed on his CEO title at Corporate Express in order to concentrate his efforts on his newest start-up, Gaiam. Corporate Express recently received a buyout bid from Buhrmann NV, a Dutch company, for $2.3 billion.

Rysavy started Gaiam in 1988 on Pearl Street in Boulder, only two blocks from his previous start-up Crystal Market that was sold in 1987 to Michael Gilliland to become the first store of Wild Oats Markets. In 1996, Gaiam moved to Interlocken Business Park. Two well-known Boulder entrepreneurs are investors in Gaiam Celestial Seasonings’ founder Mo Siegel and founder of Wild Oats, Michael Gilliland.

The company’s name, Gaiam, is a combination of the words Gaia, a Greek word meaning Earth, and “I am.” Gaia is a concept that all Earth’s living matter form an interconnected system that can be viewed as a single entity. Over 90 percent of an emerging group of individuals called “cultural creatives” by American Demographics magazine share this view.

Gaiam President Lynn Powers said last year that the company is focusing on this new consumer segment defined by common values rather than products or services. “There are 44 million Americans who want to make their purchasing decision based on a value system,” Powers told The Business Report last year. “That value can be the environment, natural health, personal growth or it can be a philosophical point of view.”

Gaiam says in the filing that they give customers an opportunity to “vote with their dollars for their values” by offering information, goods and services aligned with these values. Gaiam named this process “conscious commerce” and shared its plans for an online community of consumers who are concerned about personal and planetary health, personal growth and ecological sustainability and want to use their purchasing decisions to effect positive change.

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