Interview with: W. Michael Bissonnette, Founder, Chairman, President and CEO - featuring: their AeroGarden™, the world’s first kitchen garden appliance, an advanced indoor gardening systems and accessories for growing fresh herbs, salad greens, tomatoes, even strawberries, year-round, right on the kitchen counter with no dirt or gardening experience required.

AeroGrow International, Inc. (AGWI-OTC: BB)

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An aggressive advertising campaign and a unique expertise in infomericals leads to explosive first-year growth for AeroGrow International and the AeroGarden™



Consumer Products
Small Tools & Accessories
(AGWI-OTC: BB)


AeroGrow International, Inc.

6075 Longbow, Suite 200

Boulder, CO 80301
Phone: 303-444-7755

W. Michael Bissonnette
Founder, Chairman, President and CEO

Interview conducted by:
Lynn Fosse, Senior Editor
CEOCFOinterviews.com
Published - March 1, 2007

BIO:
Michael Bissonnette

Michael Bissonnette has over 25 years of hands on, battlefield proven, entrepreneurial experience in the funding, development and marketing of revolutionary, technology based consumer products. As founder and CEO he has built three consumer product companies from conception into multi-million dollar businesses — two became sizeable national and international corporations. An experienced fundraiser, he has raised substantial sums of money for his ventures and clients — more than $25 million dollars both privately and publicly. In addition, he has taken two of his companies public, and has negotiated the multi-million dollar acquisition of a third.

Mr. Bissonnette’s extensive consumer marketing experience encompasses retail sales distribution and direct-to-the-consumer marketing, including direct mail, radio, television and long form infomercials. He brings hands-on skill in the use of broadcast media, having conceived, developed and produced his own extremely successful radio and television commercials.

Company Profile:

AeroGrow International, Inc, developer of the AeroGarden™, the world’s first kitchen garden appliance, specializes in the development, manufacturing and marketing of advanced indoor gardening systems and accessories. The AeroGarden grows fresh herbs, salad greens, tomatoes, even strawberries, year-round, right on the kitchen counter with no dirt or gardening experience required. The AeroGarden is marketed via catalog and retail sales (including the housewares, culinary and lawn and garden channels), home shopping channels (QVC), infomercials, web marketing, print, and on-going PR.

CEOCFO: Mr. Bissonnette, what was your vision for Aerogrow when you founded the company and how has that played out?
Mr. Bissonnette: “We wanted to create the world’s first kitchen garden appliance.  We wanted to take a very expensive, complicated, but high output technology known as “aeroponics” and bring it down to a low cost, simple-to-use consumer product that would operate like an appliance. This product would allow a consumer that has no gardening experience whatsoever to take advantage of this accelerated growth,  aeroponic technology and grow fresh produce right on their kitchen counter, even in winter. Aeroponics grows far faster than dirt, it is healthier than dirt-grown produce and you don’t have to wash it.

So our plan was to bring this complex technology down to a low-cost consumer product and then once that was done, to roll it out into the retail channels, into the home shopping channels, through infomercials, and then rolling it out internationally. I believed then and still believe now, even more so, that if we could make this technology work we would not just create a new product category but create an entirely new industry, which is the indoor gardening/kitchen garden appliance industry.”

CEOCFO: You have the technology; how do you roll it out?
Mr. Bissonnette: “To begin with funding the company, we have raised $20 million to date for the research and development and the marketing of the AeroGarden™. We raised $10 million up until February of last year and then raised another $10 million to make it $20 million to launch the product. So it is $10 million in research and development and f$10 million for the product launch. We started our launch with a PR campaign and then we rolled out into a high-end specialty retailer, Sur La Table, Inc., and rolled out exclusively with a high-end catalog known as Frontgate, who were our launch partners. We subsequently have expanded our retail reach, our catalogue reach, we have gone into home shopping with QVC and we have done an infomercial. In fact, we are breaking either today, Monday or Tuesday with a press release that will speak to brand-new catalogues that we just came on line with. For example, we just came on line with a full-page ad in Brookstone, Inc., we’re in Plow and Hearth, Inc., have a back cover on Herrington ‘The Enthusiast Catalog’, and are also just launching in Hammacher Schlemmer. Those four catalogs have a total circulation of, give or take, fifteen million people. That compliments ads that just broke in Frontgate, Discovery Channel, Gardener’s Supply Company, Sur La Table and SkyMall. We’ve been in SkyMall three times and in Frontgate eleven times with full-page ads. We have been in Sur La Table three or four times.

We have a very large, aggressive campaign that is exposing our product nationally to large-scale companies at retail as well. We have expanded in Sur La Table to their entire chain, which is about 55 stores and we have launched in a wide variety of independent culinary channel stores; in excess of 500. We have been on QVC four times, each time being a greater success than the previous time with our last airing being $750, 000 in sales in one day.”

CEOCFO: You seem to have a wide range of target customers; what is the demographic?
Mr. Bissonnette: “The facts are that cooks, gardeners and people that love plants indoors are our market. With cooks, you are talking about people who like to cook with fresh herbs, the ability to have seven different herbs, such as basil and dill or cilantro, right at their fingertips for cooking, and putting right in their salads. For the first time have literally a kitchen appliance that grows fresh food for people who love to cook. And it’s really so simple, it’s no different than a toaster. You drop in our plug and grow, pre-seeded grow pod, add water and watch it grow. You don’t need any experience.. In addition, we have 14 patents pending. This technology makes it easy to have fresh herbs at your fingertips. This is a huge market where customers could come from cookbooks, home shopping, cooking channels, etc. The Rachel Rays of the world, and the popularity of the national cooking shows have skyrocketed the use of fresh herbs in cooking, it is a phenomenon.

Our second big market is gardening. There are 80 million gardeners in the US, and a lot of them are in the forties, fifties and sixties, so they are baby boomers. And now for the first time they can garden year-round. They can have tomatoes in the dead of winter and we just announced three days ago, strawberries. People can now have strawberries year-round. It is fun, convenient, fresh, delicious produce.

Who is our market? Gardener wannabes who think they have brown thumbs that have never been able to garden before; we guarantee their success or their money back. Anyone can grow successfully with this product. There are 28 million households in apartments, condos, without the land to garden, and they love the AeroGarden. And the markets extends between men and women and across age groups. We sell a large amount of these in the Home Shopping Channel category and infomercial categories, which gives us the 25-40 market and then in the retail channels, the FrontGates of the world moves us into the 45 plus range. Our demographics are very wide and very deep.”

CEOCFO: Are you selling both an appliance and different seeds?
Mr. Bissonnette: “Yes, we have both. One portion of our business is the hardware, our aeroponic system; it comes with lights and everything built right in, and the second part of our business is the software part of our business, which are seed kits. We have nine seed kit varieties and we’re continuing to expand. The software is the recurring revenues; once someone has the garden, we have the potential of a lifetime customer who is buying seed kits on an ongoing basis. Therefore, it is a recurring revenue generating machine.”

CEOCFO: Why have you chosen the types of plants you offer?
Mr. Bissonnette: “We started with fresh herbs, and decided to launch the AeroGarden in the culinary channels. Many products are out there to help you cook better. The AeroGarden is the first product that actually gives you the freshest possible ingredients to begin with. Chefs will tell you that ‘the best foodstarts with the freshest ingredients’. Now, consumers can grow their own fresh ingredients, all year round. Therefore, our first foray into the consumer market was as a cooking product that would enhance someone’s ability to cook and produce great tasting meals conveniently and affordably. We launched into the Cooking Channel with herbs as a primary vehicle and lettuce and tomatoes and chili peppers. Then we added flowers. That gave us 6 kits at launch. As we expanded into the culinary market, the demand for herbs grew greater so we launched three additional herb kits; Japanese, French andItalian herbs. From that, our next channel of distribution was in the gardening channel. We introduced our Master Gardener Kit, which allows consumers to grow their own plants and seed, and not rely just on the kits we’re putting out. The single biggest kit demand we had from day one, was strawberries. It has taken us close to a year to figure out how to do strawberries and with Valentines Day coming up, we have introduced the strawberry garden.”

CEOCFO: AeroGrow gets a great deal of repeat business!
Mr. Bissonnette: “Yes, we absolutely do! Once someone buys the garden, from that point on they continue to buy seed kits so a big portion of our business is our seed kit recurring revenue and that continues to expand as we get more machines out into the universe.”

CEOCFO: Why have you become a public company now and how does that change AeroGrow?
Mr. Bissonnette: “First, we have been planning to go public from day one. We have a high visibility company. We are in front of at least a million consumers a month; they are exposed to our product through our infomercial and probably more like ten million if you take into account our catalogue advertising. We have a high visibility to the consumer market, a great product that people love and, as a general rule, I believe that a lot of our customers will also be investors. We have an easy-to-understand technology story, consumer story, green story, new product category, new industry story. It is a high visibility, high potential profitability story and a company like that that is a natural for the public markets.”

CEOCFO: How is it going so far?
Mr. Bissonnette: “We are very happy. For a start-up, that just launched in March (2006), to be a public company is a big deal. We are happy where our stock is and feel there is huge upside potential and we think the world will respond accordingly.”

CEOCFO: You mentioned raising quite a bit of money; what is the financial picture?
Mr. Bissonnette: “We just released estimated earnings of 4.8 to $5.2 million in this last quarter when we were pre-revenue a year before. That ramp-up is extraordinary in anybody’s books. We are tracking at above a above $20 million a year company in less than a year. That is enormous, explosive growth and that speaks for itself.”

CEOCFO: You mentioned international down the road, what are your plans in that area?
Mr. Bissonnette: “We see Europe, Japan and others, but those are the primary countries now that we will be expanding into. We will be expanding into them in 2007.”

CEOCFO: Please elaborate on how you have protected your concept to discourage imitation?
Mr. Bissonnette: “It is not just one patent, we have 14 patents pending. We have made significant breakthroughs in a wide variety of disciplines that combine plant physiology, consumer interface technology, lighting, seed development, etc. We have invested a substantial amount of time and energy in learning how to do this, and 14 patents pending is a quite a few for a relatively new company.

Number two, although we feel confident that our patents clearly will be a major obstruction to potential competitors, as significant or more significant is the problem a competitor faces in trying to learn all there is to learn, to be able to do what we do. We have somewhere around 6000 square feet of grow-lab R&D facilities, where we are growing literally hundreds of different varieties of plants and finding what plants produce the best taste, best nutrition and highest output. Someone will have to invest a lot of time in research and development. They can’t figure out our seeds; there are twenty thousand to fifty thousand different seed varieties. We had to test thousands of seed varieties to figure out what would work. We then had to go through multiple rounds of getting our gardens out in the consumers’ hands to see how they could kill their plants, and then refine it through multiple generations to develop a garden that is plug-and-grow simple. That is not an easy task. To find out how they really work with the system has given us amazing insight into the next generations, and how to refine our selling methods. These are amazing head starts, not to mention pretty wide distribution for a first year company and moving into the second year with huge demand from a wide variety of new retailers in the pipeline that I can’t mention at this time.

We also have a unique expertise in being able to do infomercials; that is a highly specialized world that allows you explosive growth. If you have a great infomercial product, you can expand in a very dramatic way, which then increases awareness in a big way. In some cases, it allows you to have accelerated growth form zero to $25, 50 100 million in sales in the first year, which is a huge growth story.”

CEOCFO: Why should investors look at AeroGrow now and what should people know that is often missed?
Mr. Bissonnette: “To start with, we have had enormous growth in the first year. Number two, we have a brand-new product and new product category and brand-new industry. We have enormous upside potential. We are strictly in the US; but we have what we believe to be international potential. We have 14 patents pending; we have huge amount of trade secrets and a product line-up for the future that will include products that are priced higher, products priced lower. On top of that, every time we come up with a new seed kit, we increase the value of a person’s original investment in terms of their product so that we are constantly coming up with new seed kits, which deliver greater market penetration, greater interest from different groups. For example, we are coming up with a children’s product. We have a large open field of potential with no competitors in sight and we have a recurring revenue machine so it is not just a one-time sale. We are a highly visible company. All of those make for an exciting stock that we believe has accelerated growth potential and we think investors will appreciate that.”


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“We also have a unique expertise in being able to do infomercials; that is a highly specialized world that allows you explosive growth. If you have a great infomercial product, you can expand in a very dramatic way, which then increases awareness in a big way. In some cases, it allows you to have accelerated growth form zero to $25, 50 100 million in sales in the first year, which is a huge growth story.” - W. Michael Bissonnette

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