as reported by the Holstein World in April 2003 David Winkels, Rochester, MN, started Excalibur Sires in 1993. Hadwen Kleiss (Stardell Farms, Fredericksburg, IA), a long-time friend, was crucial to the start-up, explains Winkels, because he provided him the chance to market his first young sire, Stardell Alexis. Then Stardell Steady Crème Brut became Excalibur’s first proven bull. Early in his career, Winkels had the opportunity to work with Tom Morris, Ken Trevena, Pete Heffering, Bob Fitzsimmons, Glen Tripp, and Gary Darling. He credits this group with offering him an education that was an important foundation as he launched Excalibur. To start Excalibur, Winkels attended many dairy shows in Europe and talked to anyone who would listen, he explains. In 1994, he leased Brut from Kleiss and sold a few thousand straws that year. In January 1995, Brut was ranked number one for feet and legs in the U.S. “We did an advertising blitz and had people from all over the world wanting to sell our semen,” Winkels continues. “We sold over 40,000 units of Brut semen in a short period of time. This gave us the visibility and cash to expand.” World: Why did you start your AI organization? Winkels: Every new business has to fill a need or niche in the marketplace. When starting Excalibur Sires, I saw two definite needs. First, I was aware that many breeders were very unhappy with the leases, or in many cases lack of available leases from existing AI companies. I studied the numbers and realized a small company with low overhead could offer phenomenal lease rates and still make a significant profit. Many bull studs tried to stay away from open-end leases. First, if a bull hits (ranks high on the TPI list), the lease payments to the breeder can be huge. I have written a lot of royalty checks, some bulls rolling up six-figure totals, and it smarts quite a bit. On the other hand, we would not have had the high caliber of bulls without offering leases with such high royalty rates. Many AI organizations don’t want the hassle of dealing with the breeder of the bull. Most breeders don’t have first-hand experience with the AI industry. I can honestly say that we have only had one individual over 10 years that was completely impossible to satisfy. We just try harder to make our clients happy. We have made a countless personal friendships that have lasted well beyond the lifetime of the bulls we leased. The second opening I saw was the potential in the export market for semen. The semen that was being exported was quite often from bottom-end bulls. The export market was starving for elite American genetics. World: What are the keys to growing a start-up, independent AI organization? Winkels: For Excalibur, one key is being very honest and fair with the people we lease bulls from and the clients we sell our semen to. We also had to build up the confidence of breeders around the U.S. so they would lease bulls to a small start-up company. That was not easy! Maybe as important as anything was having a thick skin and being extremely persistent. There is a very fine line between being persistent and forward thinking and being bull-headed and nuts. We often have fantastic ideas around here that we are absolutely and totally positive will work, and quite often they don’t. You have to realize when you’re headed for a dead-end and it’s time to take another route. You also have to be able to pick yourself up after having fallen badly, dust yourself off, keep smiling, and march forward. Smiling is usually the hardest part. Another key was a very regular advertising program in Holstein World. At first our ads all had bold headlines like “$1,000,000,” or “+450,000, LEAN and AGGRESSIVE.” These ads got people’s attention and were a major factor in our success. World: What advantages do independent AI organizations have over larger AI organizations? Winkels: Really small start-up companies have mostly disadvantages. You pay more for everything, from sire directories to the cost of housing bulls, freezing semen, buying nitrogen; you name it. It’s the way the world works – the more you buy of something the cheaper it gets. Probably the big advantage we have always had and continue to still have is the ability to make a decision very quickly. I can decide on a new bull or a new group that may want to represent us in another country in half an hour. World: What niche markets can independent AI organizations better serve than larger AI organizations? Winkels: There are always niche markets to be filled. With no bureaucracy, a smaller company can often identify the niche in the market faster and fill the need quicker. World: What do you see as the biggest changes that independent AI organizations face? Winkels: When we first started I thought we could lease a high-flying proven bull every few years, pay a huge royalty to get him, but still have enough left over to make quite a bit of money. I never really intended to set up a full-fledged progeny test program as we have now. I have come to realize that in order to get the best sales reps in the U.S. and around the world, and in turn sell large volumes of semen from the hot bull, you need a wide selection of proven bulls to shoes from all the time. You also need a large sampling program to keep the supply of good proven bulls constant. This gives the reps working for you a feeling of confidence, that they will always have good bulls to offer to their customers and that they will always be able to make a comfortable living working with you. We have been expanding our program over the last year, having recently completed negotiations with about 17 other bull studs around the world. They range in size from 50 bulls to well over 300 bulls. In cooperation with our international partners, we now prove over 1000 Holstein young sires per year and have access to over 450 proven Holstein bulls at any given moment. It is very similar to the approach taken by many of the American AI companies banding together to be stronger. We have taken a more global approach, although there are long-established American AI organizations also working with international partners. Starting an AI company is very tricky. You need good bulls to get good sales reps and you need good sales reps to get good bulls. We have grown by jerks – first having only one young sire and soon after, one nicely proven bull – we were then able to get some reps. After adding more really outstanding young sires, more good sales guys quickly followed. It has just kept on that way over the years. Our latest expansion move, in which we have just about doubled the number of proven bulls on our price list, is just now being announced. The phone is already ringing off the hook with new people wanting to sell our semen. World: looking to the future, what will be the keys to remaining competitive and profitable? Winkels: The real challenge for the dairy business right now is the low price of milk and the milk market’s constant roller-coaster ride. For a smaller AI company, the challenges will remain the same, having enough good proven bulls to sell, and enough really good reps to sell them. The truly independent sales rep is a fast-dying breed. They tend to need product from at least one of the larger companies, and the bigger AI companies know this. The bigger AI companies demand a big share of the independent rep’s business or they cut them off completely. Again, this is a reason for our rapid expansion over the last year. There have been lots of ups and downs over the years, but I always count on my wife Julie and our children to be behind me 100%, no matter what happened. We have had a tremendous group of people that have helped in many different ways for us to succeed. We have all worked hard and tirelessly, taken lots of risks, etc., but the real truth is the only reason we have succeeded is that God has been good to us. Reproduced with permission by Holstein World April 2003