Joel Stone talks about what he’s done to get this major start-up ethanol production company off the ground.

According to Joel Stone, COO of ASAlliances BioFuels, everyone is trying to get a piece of the biofuels market. But Stone wants to make certain his company isn’t recognized as one that just jumped onto the bandwagon. “We want to first be recognized as a leader in organizational and employee development. Secondarily, we’re in the ethanol industry,” he said.

The Dallas-headquartered organization was formed by Americas Strategic Alliances in December 2004 to be the platform for the development of numerous renewable fuel production facilities. The basic premise of the company was to combine top-tier service providers with sophisticated financial partners. One of the biggest complexities in creating a start-up company, according to Stone, is the actual building and understanding of the organization. But that has so far been ASAlliances Biofuels’ biggest success story.

Joel Stone

Large scale
The founders developed the company to have a focus on large-scale biofuel production as well as a nationwide presence in product distribution capabilities. “The focus of the founders was that, ultimately, ASAlliances BioFuels would own and operate six fuel grade ethanol plants, and each one would be a minimum of 100 million gallons per year,” Stone said, noting that number alone will make ASAlliances Biofuels one of the top producers of ethanol in the country.

Cargill, Inc. will coordinate the feedstock for the plants. “We have a long-term agreement with Cargill to supply each of our plants, and that’s what makes our business unique,” said Stone. “Not many times does a large commodity company, one of the largest in the world, offer to do that. Equally important to our business is Cargill’s ability to market our ethanol as well as our distillers grains co-product.”

In February 2006, a group of private equity firms composed of American Capital Strategies, Laminar Direct Capital (a member of the D.E. Shaw group), US Renewables Group, and Midwest First Financial provided the equity and all of the subordinated debt to ASAlliances Biofuels to fund its growth. Cargill and Fagen, Inc. also participated in providing equity.

Three ethanol plants are currently under construction and are expected to be fully up and running before March 2008. The company has no plans to slow down and is currently laying the groundwork for three more.

Multi-level experience
Stone joined ASAlliances Biofuels as COO in June 2006 as its first employee. He was selected because of his extensive background in the ethanol industry as well as with start-up companies.

In the late 1970s and early ’80s, Stone worked on one of the first large-scale ethanol plants. “It was a plant I designed, built, and operated, based out of Loudon, Tenn., and it still operates today,” he said. He continued in the ethanol industry throughout the ’80s and moved into the functional food industry in the early ’90s, when he was hired as a director for an enzyme producing company that was in its development stages.

Stone then moved on to a food ingredient company, also a start-up, as the 10th employee and was instrumental in its growth and market
leadership. Just before joining ASAlliances Biofuels, Stone was the COO for a company that operated three ethanol facilities for just shy of a year.

“When ASAlliances Biofuels’ board of directors interviewed me, they saw I had experience with technology, organizational development, and building a sound business platform. I had also been involved with public companies, and they were looking for a mix of someone who had that level of experience. I saw it as an opportunity to showcase my vision of how a company should operate in the future as far as operating structure and organization to become one of the premier companies in the biofuels area,” Stone said.

Defining moment
The real challenge in starting up an organization like ASAlliances Biofuels is to identify the company’s core values and vision, explained Stone.

“We’re different from most companies. We’re not out to hire people that call themselves managers; we’re out to hire leaders. A leader is significantly different than a manager. That’s what differentiates us,” he said.

Stone’s philosophy is that leadership is what enables new organizations to nurture and grow because the most powerful resource in plant startups is the people. Employees can easily be taught the technical know-how, but not all can be taught leadership and how to turn the company into a world-class organization.

ASAlliances BioFuels currently has a little more than 120 employees on board; the majority of them are at the plants. Each plant will employ an estimated 54 to 58 people. According to Stone, the organization at the corporate level is efficient and lean, and the leadership team intends to keep it that way.

“We’re very selective in the people we’re bringing on board. By March 2008, we’ll have more than 180 employees. In the span of a year, we went from just me to 120 people. In an additional eight months, we will be 180 dedicated employees. Our team has never worked with each other before and will be working in very large facilities with modern technologies for ethanol production,” Stone said.

One of the key milestones for ASAlliances Biofuels occurred in February 2006, when the company closed on $433 million of project financing, which included $275 million of senior debt. “That’s what put ASAlliances Biofuels on the map,” Stone said. “That was the largest funding an ethanol company ever received at the time. It occurred with a bank syndicate through Wall Street rather than an agricultural bank or a farmer cooperative. This was a defining moment for the industry.”