Doug Fahrforth
Building Relationships, Exceeding Expectations
Floor to ceiling windows let in ample natural light. Gleaming floors run throughout. A ping pong table and fitness equipment are easily accessible. An outdoor patio space invites all to come sit for a while. You may think I am describing a resort-like area instead of one of the region’s fastest growing – and hardest working – manufacturers: Blue Star Power Systems. This attention to detail runs through and through the company, from taking care of the 100-plus employees to taking care of their distributors and ultimately the end user, it’s clear this company is built on exceeding expectations at every level.
The company was founded by Doug Fahrforth and a partner in 2004 in his garage. Today, the company has a new 85,000sf building, new growth potential, and North Mankato has a new resident in the North Point Industrial Park.
“We are on 13 acres and I love the midwestern feel,” Fahrforth says. He always thought he would be working in a field, but in a different way.
“I grew up on a farm near Vernon Center,” he continues. “We ended up moving to Mankato in 1991 when I was 11. That was a huge cultural change for me. Until then I was sure I was going to
be a farmer.”
That move to Mankato though, generated a mind shift in Fahrforth.
“The move was hard on me at the time but in the end was probably the best thing that ever happened as it opened my eyes up to other opportunities,” reflects Fahrforth.
To his credit, Fahrforth could see those opportunities clearly when they came his way, vision that has helped him grow that start-up in the garage to a multi-million dollar company housed in a 13-million dollar manufacturing facility.
Blue Star Power Systems, Inc., a power generation systems integration specialist, manufactures complete diesel and gaseous driven generator sets ranging from 20 to 2000 kWe. Blue Star Power Systems has grown to offer its own full and complete product line. This allows Blue Star to serve all major agriculture and industrial markets within the decentralized power generation industry.
Not one to toot his own horn, or want media attention, I only convinced him to be interviewed for this article because I told him it would help others. He can offer insights through his experiences that our readers can glean and learn from. He did not disappoint. Sitting in a conference room in his new building…which is divided into 67,000sf for manufacturing and 18,000sf for office space…Fahrforth was candid about how he got here, challenges he has had on the way, and the people that helped him get here.
Doug, here you are at age 39…what you have accomplished at such a young age is extraordinary! How did it all begin?
I graduated from Mankato West in 1999 and was set to attend the University of Wisconsin La Crosse to run track. But I ended up hurting my back during my senior season. My plan was to stay in Mankato and attend MSU for one year as I rehabbed and got better. Fate stepped in I guess, and I met Adrienne who would become my wife. Needless to say, I spent the next four years at MSU. While in my first few years of school, I really didn’t know what I wanted to do, so I settled on finance with the idea that I would maybe work in the finance field somewhere. As I learned more in business school, I began to think about wanting to start my own company, so during my last year at MSU, I got into refurbishing used generators out of my garage with a partner who had experience with generators. It seemed like an interesting business and I kind of took the approach that if it didn’t work I could always go get a job with my degree. Once I graduated, we decided to make our business official and we started Blue Star Power Systems, Inc. My original partner only stayed with me for the first few years of the company, but without his contributions Blue Star would not be in existence today.
What made you interested in generators?
I wasn’t interested in generators at all. I didn’t know anything about generators. But I kind of always knew I wanted to start a business, I guess, and this opportunity came along.
So you worked out of your garage for a few years. It didn’t take long to outgrow that space.
At a point, we knew that to keep it going, we needed a physical space that was not my garage. This was in 2004. We chose Lake Crystal because it was very difficult to find affordable buildings to lease or buy in Mankato. I had actually met the Lake Crystal city administrator at the time, Bob Haag, who indicated there was a building for sale that was pretty small that was a good fit for us.
We kept refurbishing used generator sets for the first couple of years, and then in 2006, we started selling and marketing product to the agricultural community, like smaller gen sets. Kind of a lower barrier of entry, they didn’t really require a lot engineering, specification documents, things of that nature.
So we did that for a couple of years, and then right around that time I brought my second partner on board and he is with me still today. His name is Bruce Prange. Bruce was a veteran in the power generation industry, and had already been in the industry for 25 years working at Katolight. He joined us in 2008, and prior to the addition of Bruce, I could say we didn’t have a lot of engineering resources, documentations, things of that nature, and Bruce brought that all on board with him. He had a pretty loyal following in the industry, so he brought us a lot of credibility. He’s a big reason for the success of the company.
With Bruce on board, we started getting a little bit into the industrial markets, like bid spec and looking to bring distributors on board to sell our product. That’s how we go to market as we sell our product through distribution. That distribution is located throughout the United States and Canada. Canada’s the only country we sell to outside of the United States.
As we started going in this direction, we found it was time to move again. And again we found the right spot in Lake Crystal. At this point we were in a pretty significant growth mode, adding people and growing our revenue.
It seems like your growth was slow and steady, up until hitting the growth spurt, what sparked it?
It’s a good question. For us, it was a number of things. Bruce was a big part of it. We were in a bigger facility in 2010 than the original one we started out in, which was like a 5,000 square foot building. The new one in Lake Crystal was about a 25,000 square foot building, so we had more capacity. When we were able to bring distributors in, they looked at us more credibly like we were a real company. Then just spending time finding new distributors, new customers, working out your brand recognition, we did some trade shows and things of that nature. No magic formula, just a lot of hard work.
Who are your customers?
Sometimes we don’t even know who our customers are because the distributors are selling to them, but we’ve sold into a lot of interesting projects. The main markets include industrial, commercial, municipalities, telecomunications, and construction. We do a lot of work for the city of New York. We sell a lot of generators to NASA. Boeing would be another company. Probably the most unique project though, was through John Hopkins University who placed a telescope on a mountain top in Chile. It is there to take photos of space and the milky way, and we are powering it!
The way our industry generally works is there is a company out there that wants to build a facility, like the one we are in now, for example. They’ll start at an engineering firm, like ISG, to build the project on paper, and as part of that project they want a generator. Then, if we are an approved manufacturer with that engineering firm, they’ll put us in the specification. What we work with our distributors on, is getting to become an approved manufacturer with an engineering firm. Then we become part of the spec and it gets bid out. If our distributor wins it, then we get the order.
So your growth mode continues. How did you know it was time to build this facility?
By 2017, we were running out of space. We were starting to lose out on business because we didn’t have the capacity to build enough generators to keep up. We had employees working out of closets and things of that nature, and so we decided we needed to make the jump and build a little bit more of an official facility. We bought the property from the city of North Mankato in 2017. The reason we chose North Mankato is that I’ve been a lifelong resident, so I’m pretty passionate about North Mankato. Nothing against Lake Crystal, it is a great place to operate and do business in, but the reality was they didn’t have an industrial park like this for us to build a facility of this magnitude. Obviously, it was important for us that once we built the facility, it was going to maintain its value.
Additionally, I live two and a half miles from here, so the idea of walking or riding my bike to work was obviously important to me. Employee retention and attraction is generally going to be easier in a more highly-populated area. We did have quite a few employees that were driving from all over, and they still do, but they’re a little more centrally located around greater Mankato.
This building is incredible. Wasn’t it hard to run your business, and then also plan this?
It was very challenging. It’s challenging for both myself and Bruce. This might be a good time to clarify our roles, I oversee sales and all the financial aspects of Blue Star, and Bruce oversees the engineering and production management of our products. Bruce was very heavily involved in the design of the building and specifically how to best set up the manufacturing part of the building. For both of us, it took away a lot of our time from running the company, which was challenging, but it was exciting knowing that we were going to be able to build something that was going to last us for as long as we wanted to be involved with Blue Star. Quite frankly, we both knew the shortcomings of our old facility, and so we knew what the wish list was up here.
I love how you paid such close attention to making sure your employees would be happy. Can we talk about that? Just why you feel like that was so important?
This facility is a game-changer for our business, and something that the growth and momentum of our company required. Sure, having enough manufacturing space was important for us to continue growing, but more importantly to our company was the emphasis in providing a great place for our employees to work. That was at the forefront of every decision we made, absolutely.
Some of the amenities we incorporated in the new facility include an exercise room, a walking trail around the property, and an outdoor patio located off the building’s cafeteria. It was super important for every employee to have visibility to natural light throughout the day. You spend so many of your hours at work, and we wanted it to be as enjoyable as possible. Actually, I’d like to credit my wife Adrienne for a lot of this, because she played a huge role in designing the office and implementing those pieces.
How many employees do you have?
We have a little over 100 employees right now. All of our employees work out of this facility, and this will remain our only location for the foreseeable future. I think another reason, too, that the building was important to us, was we take a lot of pride in the quality and the craftsmanship of our products, and the attention to detail that we put into our products. We wanted a facility that mirrored that. That’s why we put so much attention to detail into a lot of the things around this building. When our distributors come in here, we want them to be impressed, we want them to know that we’re here for the long term, and they can be proud of selling our product.
How is the city of North Mankato to work with?
They are great to work with. I have a lot of great things to say about both John Harrenstein and Mike Fisher. Mike was the starting point. I can still remember meeting with him out here on this road when this was all nothing but farm fields. He was passionate about getting us out here, and the city did a lot of great things for us. Yes, it was a good experience, which I’m happy about because I live here. I think we’re a nice addition to their industrial park. There are a lot of truck businesses out here, but we’re a true manufacturer, and I think that they looked at us as an opportunity to bring true manufacturing jobs to the park and because they knew we were going to build a great facility. We are an anchor out of here in the corner of the park, and hopefully it will attract more manufacturing jobs up to this area.
We’ve talked about all the good, now let’s talk about what some of the challenges you have encountered and then what you’ve learned through those challenges.
A couple of different things come to mind. I think locally for all employers, finding employees can be a challenge. The region is doing very well, there are a lot of successful businesses and we’re all fighting for the same people. That was one of the reasons why we put so much emphasis on the in-house amenities for our employees. We want to differentiate ourselves, but finding good people has been a challenge. Obviously our move to North Mankato, at times, has been challenging.
From the business perspective, I think our biggest challenge, and it has been this way from day one and it probably will continue to be this way for the foreseeable future, is brand recognition. We compete in an industry that we’re going head-to-head with Fortune 500 companies, and they have a known entity in their brand. It was more of a challenge for us early on, but as we’ve grown and gotten more distributors to buy into our brand and what we stand for as a company, it’s gotten a lot better. But that will continue to be a challenge for us.
Now might be a good time to address what I see as a major hurdle for anyone wanting to start or grow their business. In 2010, as we were growing, we faced what I view as a pretty common obstacle for young growing businesses: access to capital and resources, or financing. We struggled with this in 2010. We had outgrown our existing bank, and we were looking to find a bigger bank, but we really struggled to get anyone to lend us money. We eventually did after, I think it was 12 banks, turned us down. Yes, that was a challenge.
What came from it, though, was we actually got involved a little bit with the Small Business Administration (SBA), and they helped us through some of that stuff. Mike Nolan was there at the time and he asked me to be a founding member of the Small Business Development Corporation (SBDC) advisory board for the state of Minnesota, and I’m still a member today. I actually serve as the chair. I still do that because I feel very passionate about what they do, the help they give new entrepreneurs, and quite honestly established businesses.
One of the things we talk about is banks’ reliance on guarantees the SBA provides. Obviously, in my opinion, banks are inherently in the risk business, but most banks today don’t have much tolerance for risk, they really don’t.
What makes it challenging for the business owner then, is they need to have more equity than they probably have access to, or they have to come up with some other guarantee, which is where the SBA a lot of times steps in, thankfully. But I just feel like banks today rely too much on that. That’s another thing we talk about at the meetings. The relationship between a business owner or an entrepreneur and the bank, can be challenging, and it has been for me, obviously going through that process in 2010.
I think the big issue is, as the business owner you look at your business through rose-colored glasses. You think, ‘well, I know where I’m going’, so that’s how you view your business. But the bank looks at where you are today, or what you’ve done in the past. There’s that conflict, a little bit, of who you really are. Yes, it can be challenging. On the other end of it, I think a lot of times you hear, or I talk to small business owners, and they don’t know their finances as well as they should. Maybe they trust somebody else to do it, or they don’t think they have time, and I think that’s such an important thing for a small business owner to know, is their financial position. It helps you make educated decisions, it helps you with your relationship with your bank. All those things.
So after the 11th ‘no’, why did you just keep going? Don’t you think some people would be like after five or six, maybe this isn’t going to work?
I think most business owners or entrepreneurs, we have that inherent gene where we just don’t give up. You get knocked down a lot, but you have to keep going, and that’s just always the way it’s been here. I think one thing I would say that’s maybe important is, once I make a decision, or Blue Star makes a decision on a path we’re going to take, we go all-in on the path. We are not wishy-washy about it. When we decided we were going to build this building, we had challenges. Early on, we had issues with the site, as far as dirt and soil quality. We had issues getting the building appraised at the value it needed to be to build the building, and there was just all these things, but at the end of the day, we knew this is what we decided we were going to do, so we just kept fighting until we accomplished the goal.
What would be your advice to other entrepreneurs?
I guess what I would say is you need to be able to handle stress. I think a lot of times, people underestimate the stress factor in starting or running a business. People on the outside think being a business owner is glamorous, and sometimes it can be. But a lot of times you see that person out in a public setting, or maybe at a meeting, and you’re usually seeing them during the day, so it looks like it’s fun and they’re having a great time. Maybe they are, but what a lot of people don’t think about or they don’t see is you walking around your house at 2:00 AM because you’re worried about a decision you have to make, or a decision that you’ve already made and you’re hoping it’s going to work out. I guess I would say that you have to be prepared to have a different level of stress in your life, and some people have a hard time with that.
When did you officially move into and start operating out of this facility?
November of 2019.
I know it’s only been a few months, but what’s next, or are you already thinking about the next growth move?
Next for us is we’re going to continue to introduce new product offerings. We’ve been a company that has relied pretty heavily on customizing product for customers, and in the last few years, we’ve really also started to work on more of a standard product offering. We’re not going to go away from our ability to customize, but there’s a pretty big market out there that wants and will accept a standard product offering. We’re going to work on improving that a little bit while we maintain our ability to customize, because that’s really what does set us apart from a lot of other manufacturers, is we will customize the product how you want it.
We are always working on our customer service. That is very important to us. Everybody always claims to have great customer service, but most don’t. We do. We really emphasize taking care of our distributors and calling them back and getting the information in a timely manner. I suppose another thing to work on is to continually make this a better place to work. Again, our employees are always at the forefront of everything we do.
That’s looking to the future, but you’ve mentioned to me that people in the past really influence you still today?
There were some people I should mention who were very instrumental in my life. As a young man I’d have to say two people come to mind. The first is John Barnett who was the principal of Mankato West High school from 1980 to 2004. I was always amazed at the respect and care he showed for his students. John served on the Minnesota State High School League Board of Directors and was heavily involved in the track and field aspect, so I had the pleasure of getting to know John more than most students through discussion of track and life in general. People always hear me use the expression ‘life isn’t fair, but you can be’. I learned that from John, and no one epitomized that as much as John. John was an incredible person and no doubt had the same impact on countless students as he had on me.
During college for two years I worked for Steve Eckers at Play It Again Sports. From my first day on the job Steve treated me like he had known me my whole life. Steve trusted you as an employee and trusted you do to what was right. I’ll never forget playing catch with Steve in the store when we would be slow. I remember thinking how great it was to be that close to the owner of the company and work for someone who genuinely cared for you and trusted you. I remember thinking at the time, if I ever owned a company, I wanted my employees to feel the respect I felt from Steve. He’s a big reason why I, and Blue Star, have such an emphasis on treating our employees like they are family. I have an open-door policy at Blue Star. I want any employee to feel they can talk to me about anything and not just work-related issues. I care deeply about all my employees and their families and want them to have the best experience they can while at work.
A more recent influence, I would say, is Joe Paulsen who runs his own company, Pinnacle Business Solutions. I met Joe about eight years ago when he was general manager at TBEI, our business neighbor in Lake Crystal. We met at a peer leadership group and immediately hit it off. For the past eight years we have tried to meet once a month. Joe is an incredibly dynamic, but also a very levelheaded individual. He has probably helped me make more decisions than he realized through sharing his insight and experience with me. I would absolutely consider Joe a mentor and someone I feel very fortunate to have a friendship with. I really respect his opinions. Yes, those are three people that are important, I think, to me becoming who I am today.
Just to reiterate there are a lot of people responsible for us getting to where we are, and a lot of those people are in our building today. This isn’t a one-dog show, there are a ton of people here who are very important to what we do.
Why is the name Blue Star?
“That’s a good story. One of my favorite movies of all time is the movie The Original Wall Street, and when I met Adrienne, she had never seen that movie. Of course, I made her watch it. In the movie, there’s an airline called Blue Star Airlines. This was right around the time I was talking about starting this company, and she said, ‘Oh, Blue Star, I really like that name. You should name your company Blue Star.’ When your girlfriend suggests that, you usually take her up on it, so that’s how that came about.”
Now, Fahrforth has not only grown his business, but his family too. He and his wife of 11 years, Adrienne, have a son and a daughter, ages ten and seven. Family time is important to Fahrforth, who tries to limit business travel so he doesn’t have to be away from them for long.
In his free time he likes to play golf, and he still likes to run. The family likes to spend time in Okoboji, Iowa during the summer.
“You kind of forget you are in the Midwest when you are there,” he says. “It’s funny to see the reaction of people who we take there for the first time. You’re driving through cornfields up until like a minute before you reach it, so they always question just where we are taking them. I just say, ‘Don’t worry about it, it will be worth it when we get there.’ And it always is.”
Fahrforth Gives Back: Helping Others Through SBDC
“After working with the SBDC in 2010 to secure funding for our business, I was asked to be a founding member of the SBDC State Advisory board in 2011. I am still a member today serving as the chair because I feel passionately about the work they do in not only helping new entrepreneurs start businesses, but the help they give established businesses. A big topic recently during our board discussion was succession planning for business owners. It’s important those established businesses don’t go away when the owners retire, but find new owners. Small business plays such an important role in the vitality and employment in communities all over our country. Often that transition from existing owner to new owner can save more jobs than any new entrepreneur start-up. Providing help to buy an established business is becoming a big focus of the SBDC state offices. Bruce Strong, the SBDC State director is very passionate about this issue and has done a wonderful job growing the SBDC’s presence in the Minnesota business community. Mankato is unique in the SBDC world, because while the SBDC office is hosted by the university. It operates in the downtown business district. I feel that helps build its credibility with the business community. It is something I would like to see implemented in more university hosts across the state.”
THE ESSENTIALS
Blue Star Power Systems
2250 Carlson Drive
Mankato, MN 56003
Web: bluestarps.com
Photo by Jonathan Smith
