(bright upbeat music) - Welcome to Business Forward.

I'm your host Matt George, joining me tonight Paul Leamon.

Paul is the Executive Director of Distillery Labs.

Welcome Paul.

- Thank you, I'm honored.

- Yeah, you know we had a talk last week and I was just so pumped talking to you and talking about not only our great community but just Middle Illinois in general, and you know, I said, "I gotta get you on this show.

We gotta talk."

So welcome to Peoria.

- Thank You.

That's been six weeks in now.

- Alright, so where are you coming from?

- Coming from North side of Chicago.

- Okay, well Weather it's about the same, right?

(laughing) A lot of snow.

So, let's start off with you.

You're an entrepreneur at heart, right?

That is a theme that runs on this show.

What drives you to continue to just be in that space or that mindset all the time?

- It's... You know, I love the challenge of taking an idea that's, you know in your head on the back of a napkin into reality.

So it's those first phases of really, kind of idea generation, iterating on that idea seeing if there's really any substance to it.

If there's a fit in the market, if there's demand or potential demand for it.

I love those early phases of what I consider kind of zero to one.

So nothing to something.

And that's what gets me up in the morning is the excitement around that.

- Well, kind of explain that.

So let's say I have an idea for a business that's zero and what takes it to one or two?

What's that next step?

- So, there's a lot of different components to it.

And I love to start with advising other companies to start with getting excited about the problem that they're solving.

So a lot of times that spark hits because you have a problem and you have an idea on how to solve it, and then you think others might have the same problem that could be solved.

And so kind of starting with that mindset of just getting excited about the problem.

A lot of times people hurry up to the solution and they spend a lot of time developing an App or a Website or a physical product without spending any early phases, really understanding the core of the problem that they're solving.

So it's one of those things that you have to...

There's a lot of different back and forth in terms of, in the market studying the consumer that you think you might be marketing to, understanding what and how they're solving this problem today.

It could be a work around, it could be something else that they're doing instead of going after the solution that you might have.

So really kind of ethnographically understanding how that consumer works in their environment.

So it could be, if it's a business product, it could be the way the business is operating.

If it's a consumer product how that consumer's interfacing with it.

So again getting excited about the problem, understanding then how that fits into a potential solution for you.

- And do you see I'm kind of jumping ahead but this is very interesting to me.

So do you see a lot of business ideas and startups where the first thing they go to Headspace wise is funding?

- It is, absolutely.

- It shouldn't be, right?

- It should not be.

And in fact, you know this is one of the things that I'm excited to kind of help address here in Peoria.

And I think it's a Midwest thing in general that you have to have a fundable idea.

In order to have a fundable idea, there's a lot of steps that you can take and should take without capital with your own time.

I mean, your own time has a value to it, right?

So without any outside capital, there's a lot of different things that you can do as an aspiring entrepreneur, to figure out if that idea has potential.

And that's what a funding source, whether it's an angel investor, a venture capital firm or other institutional investor, even friends and family, when you go seek money from friends and family, "What is it you're trying to solve?

Prove to me that you've got a market here to go after that there's consumer demand."

- Yeah, I almost feel like early on in my career, I started a business focused only on money and I almost feel like I got the money just to show me that I was going to fail.

(laughing) It didn't make sense to me at the time, right?

You know, over time.

So, okay.

Well, you've got an extensive background, not only as an entrepreneur, but investment banker, technology leader, you just bring all of those subsets of talents into what we're about ready to talk about, right.

So the investment banking side.

Did you work with venture capitalists and funding businesses?

I mean, that's basically funding ideas?

- Yeah.

So I intentionally kind of went the investment banking route for middle-market companies.

So, when I was coming out of graduate school, you know, the the direction for investment banking was for wall street investment banking.

So working with large fortune 100 fortune 500 type of firms in their capital raising efforts whether it's be equity or M&A activities, you know, debt.

I intentionally went to the middle market firms.

So companies that were 50 to a hundred million and higher up to about 2 billion and in a growth phase where they're looking to get to their next phase of development.

So working with them in terms of what their strategies might look like, how to attack the market, you know should we issue more equity?

Do we need to go the debt route?

Should we be looking at M&A opportunities?

So that was really where my head was.

I knew it wasn't a long-term career path for me.

It was a five-year stint.

I wanted to learn as much as I could on the financing funds, how businesses get financed.

So we didn't do a lot with VC, these were firms that were beyond kind of the venture capital side, but certainly private equity and the public equity markets as well.

- You know, what was interesting when we spoke last week is, it almost sounded like you had a POL-Plan.

(Paul laughing) Like you said, okay, I need to do the investment banking side, and then I need to get into this technology space and then I need to get over here and now I'm wanna wrap it all together.

Is that true or?

- Somewhat true I mean, it's one of those that I've always had an entrepreneurial bug in me even as a kid.

- [Matt] Yeah - I remember growing up, you know there was a dilapidated department community down the street in my small town and I approached my dad like, "How do you redevelop a place like this?

How do you make money with a real estate investment?"

And I didn't know the first thing about mortgage financing or anything else.

And he kind of walked me through a few things but just that inquisitive nature of how do you kind of launch a business?

How do you finance it?

What are those ideas?

But I never...

I knew at some point I was gonna start a company but I never had the exact path.

It was one of those that, if you're always out there seeking new opportunities, doors open and you evaluate whether it's time to walk through that door or not.

And so it was one of those that coming out of undergraduate I decided that I was pursuing a kind of a public policy route, political science route.

So I moved to DC and worked for a consulting firm there.

And that's really where I got excited about technology.

Northern Virginia was a hotbed from AOL days, America Online.

So lots of entrepreneurs kinda scattered out from AOL and started new companies in Northern Virginia.

So that kinda got me a little bit more excited.

And my plan going back to graduate school was okay this might be a right time to make a shift into entrepreneurship and starting a company.

And that's where investment banking door opened.

It was... we've got a lot of deal flow in terms of even technology-based financing, this could be an interesting route to be able to put some money aside.

So day one I don't have to start seeking outside capital where I could pursue this learn, and then walk through that next door down the road.

So it was kind of the Pol-Plan, but it was walk through doors, as the doors open for you.

- And you have to have patience.

And I think that's key.

So one of the themes that's really run through this show and its existence is really the person behind each company or each job that they have.

And I always find that interesting because there's always a kind of like an athlete.

There's a drive in there, that is fun to talk about it.

It may not be the most comfortable thing to talk about but I think when you explain what you're doing and how you do it and how you got there it paints a better picture.

So that's cool.

So Distillery Labs you're tasked with leading this world-class technology incubation facility.

What does that mean?

(laughing) - It's right now close to zero.

I mean, there's been a lot of work done but it's not turned on yet.

So that zero to one phase I think we're still kind of early phases in terms of really solving entrepreneurial problems for the Peoria region.

And that's really what we're about.

I mean, if you think about, I mean a lot of folks think incubator, business incubator, technology incubator, what really is that?

And it's really putting kind of definition around that.

We're here to help you, the Peoria community, the Peoria entrepreneurs or aspiring entrepreneurs.

Think about designing, building and launching companies.

And so goal over the next you know, five, 10, 20 years is to have hundreds of entrepreneurs begin to pursue those ideas, know how to do it.

So chart the path and understanding what that path might look like and how to get through that process to be a fundable company and then attract financing and then grow and hopefully have thousands of new employees that are based here in the Peoria region, based on those startup companies.

- So when you scroll through all of the different incubation facilities all over the country, are they mainly in larger cities?

- Many of them are.

I would say over the past five to 10 years, that's gradually changing.

I think there are smaller communities that are beginning to understand that to drive economic development.

Entrepreneurship is probably one of the key tools in the toolbox to be able to do that and doing that through an incubator.

So an incubator really being challenged with, you know how do we help entrepreneurs reduce the risk of entrepreneurship?

So we wanna elevate your chance of success and speed to market.

How can we take you down that path a little faster than you might be able to go on your own, without the resources of the incubator?

- That's interesting.

Well yeah, so OSF is a big part of the group driving this business.

Robert Sehring is the CEO of OSF Health Care.

And he's Chairman of the Board of Distillery Labs too.

- That's correct.

- So he said our board members and partners look forward to the important work he will take on.

My question is, where do you start with something like this when you have so many people with so many ideas and I'm just gonna use my term with money on the sidelines.

Because there is right now COVID has changed the way entrepreneurs are thinking there's new businesses coming in, there's businesses sadly going out good or bad.

And so, how do you kind of parse through all that?

- So, there's a lot of different components to that but going back to even you know, the idea of how you start your own business, if it's your business, getting excited about the problem that you're solving and really understanding that problem.

So again, there's been a lot of work done with volunteers today.

There's been four working groups put together the board has has been active since last summer.

So there's a lot of this groundwork that's been developed but it's still getting our arms around kind of what is if entrepreneurship is one of the solutions to drive economic development, why don't we have as a pure region more entrepreneurs?

What's inhibiting us from actually pursuing that idea we might have, is it you know, we've got a great career and I'm not ready to kinda stop my career because there's too much risk you know, quitting my daytime job and starting this idea is that I don't have an idea.

So I just need help generating ideas or maybe I've gotten through both of those phases.

I'm willing to take the risk.

I have an idea, but I don't know how to start.

You know, maybe it's back to the issue you mentioned before.

I think I need to go raise capital.

So I talk around to folks that I know that have capital and they come back with knows.

And then I say, "Well, the region just doesn't have enough capital sources for me."

So I really can't get this going in Peoria.

Maybe I should move to another location instead of pursuing some of those early phases of business development.

Before you get to a phase where you're ready to raise capital.

So, long answer to the solution of we need to understand that problem a little bit more.

And so one of the things that I've done over the past six weeks of being here, is talking with folks and like what you wanna be an entrepreneur, What are you seeking to do?

What's your idea?

What phase of that process are you in?

What are some of those challenges you're finding here in Peoria to get there?

So understanding a little bit more of the problem so that as we're designing the solution, Distillery Labs being the solution, we know what programs to put in place.

Is it a program that really helps you develop a side hustle 'cause you've got a daytime job and you want to do something on the side?

Or is it getting over the fear and the risk associated with starting something there's a program around that?

Or is it the pathway to take your idea from zero to one?

Let's do educational programs or is it the financing piece?

And there's gonna be a little bit of all of those things but really kind of know where we start out of the gate.

Here's what we're gonna focus on.

We can't be everything to everyone.

Here's kind of the first challenge we're gonna tackle our first set of challenges.

- Do you think the with in terms of economic development for Middle Illinois let's say.

Are you seeing that this is the prime time to start this in a town like Peoria?

Because you're seeing some net migration out of bigger cities right now, Chicago especially, I mean, you moved here, - Right.

- So are you seeing that feeling that?

- I am, and again, I'm new to Peoria.

So, I don't have kind of that some of the historical context around what those trends look like but from an outsider looking in, you know I've been in the entrepreneurship space now for 16 years and I've seen a lot of the interesting innovative work that even large corporations are doing now in terms of their innovation practice which is much more open innovation.

So, open innovation meaning we're not gonna design these solutions necessarily in our R and D lab.

We're gonna look to you entrepreneurial community to help solve some of these problems for us.

And so you look at an OSF HealthCare or a Caterpillar, and others and see some of that work.

So me looking in, this is part of the things that get me excited 'cause I think the community has a foundation that exists.

It's purely has got a long rich history of kind of shifting you know, adapting to kind of how the market shifts and changes from distilling days through manufacturing, to healthcare and looking forward to more entrepreneurial changes.

And so when you already have a community that's used to shifting like that and adapting and being resilient.

I think it's right at the edge of being able to move into what I would consider kind of an entrepreneurial ecosystem mentality.

- So you basically would have to I'm guessing work with the chambers and work with just about everybody to try to understand really how this town works, because like you just said it wasn't long ago.

we were all manufacturing and now Middle Illinois is turned into healthcare across the board.

So that's interesting.

So funding.

Let's let's kind of switch gears here and then I wanna talk about how you become part of this club so to speak.

So you got a $10 million grant.

How does that... Where does that come from?

- So this was back in the rounder administration and working with the president of USA, Illinois the innovation network was kind of ingestation phases in terms of thinking through how do we get Illinois as a state to be on the cutting edge of innovation technology, and really leveraging a lot of the resources that we have as a state.

And so that's where the process started about three years ago, Peoria was awarded one of those grants.

We are the only one that's not attached to a university.

There are 15 total in the Illinois Innovation Network.

So we're one of 15.

So the $10 million grant, as you mentioned has been awarded that is for capital development only.

So not for operational work, but for capital purposes.

So- - You're building - Rehabbing the space, purchasing the space.

So this is the building that we're purchasing from Illinois central college, right down in the heart of Peoria.

- Yap.

- So Adams and Fulton right there on the corner.

So right in the opportunity zone of downtown Peoria.

So it's really that funding is gonna help us purchase that property from Illinois Central College, rehab It, so there's work that needs to be done.

It's currently a classroom building for the most part.

So opening up a lot of spaces for co-working, for events cafe spaces, workshop spaces, we're hoping to have you know, some prototyping work in their design and prototyping if you have a physical product or a service that needs some prototyping.

We're working on some other space components, could be a test kitchen.

So these are things that are still in early design phase for the building.

And we're hoping that we can make it through some of that design work by the summer with the goal of starting construction maybe by mid to late summer.

- Yeah and you know, what's great too, is when we're talking about economic development, we're really talking about the future, but it's happening right now because this building's going to be rehabbed very soon which means we also have OSF doing their headquarters and having it based downtown.

Then unity point's done a lot of work with their space.

And pure is coming back.

The Museum's great, the Caterpillar Visitor Center is awesome, and so I think that's what's very, very exciting.

We have beautiful riverfront and I think it just gives our community something to smile about.

- Absolutely.

And I couldn't agree more.

And it's a again, outsider coming in new to the community.

There's a lot to get excited about.

I mean, I know there's been some fits and starts around kind of this entrepreneurial concept for you know, 10, 15 years or so.

But I think this really begins to pull it together Distillery Labs in terms of there's resources now available to really create this as a central hub, but connected to the rest of the community.

And really making sure that the entire community, all corners of the community are involved.

- That is really cool.

So let's say I have an idea and I want to be part of Distillery Labs.

What's my next step?

What do I have to do?

- So where in the process of creating kind of programmatic entry points.

So depending on where you are in that process of idea generation and testing, being able to come in and take workshops or classes that help you through that process of understanding kind of what the entrepreneurial journey looks like how to really turn that idea into things that you can begin to test with the market.

And moving through that process all the way down to kind of the financing pieces at the end.

So, those programs will be held in person when we can, in the interim, as you know, COVID still is around, there may be more virtual.

But we're beginning to create those programs.

And so that entry point right now is more virtual through that programmatic lens.

- And so there is a fee I'm guessing.

- Correct.

- Could be part of this.

- Correct.

- And so, I'm gonna go back 'cause I think this is going to draw a lot of people's interest.

I have an idea, I pay my fee.

It's basically depending on where the business is at and all these different advisors it's almost like having a mentoring team.

- Correct.

- So if you think about it as there's a couple of different avenues.

I mean, let's assume the building's open.

One of the ideas with an incubator in the coworking space and office space and event space, work rooms, board rooms, is the collision of people and ideas, right?

So you wanna be around I mean, a lot of energy comes from other entrepreneurs that are challenged with the same things that you're going through.

And I had a lot of mentors through my journey as an entrepreneur, you know folks that I could call up and say, "Hey, I'm thinking about this challenge with Mike, my customer base, how did you address it with your business?"

So if you're in a space where you're working on your business idea and you're with your peers and other mentors, people that can help you along the process, that's kind of the membership piece.

So we'd love to have a couple hundred is what we're targeting in terms of size constraints for the the actual physical space, to have 200 entrepreneurs working on their businesses, colliding ideas, working through challenges together, utilizing the resources like a prototyping lab.

But if you're not part of the membership so there'd be a monthly fee to be a part of members.

You can still participate in some of these programs.

So it could be just educational workshops where, you know you'll come in for a three week once a night, you know, once a week type of class.

So there'd be fees to that.

And we're hoping to get sponsorship for folks that are economically disadvantaged, that, you know instead of being able to we're having to pay a fee, could offer some free resources in terms of classwork memberships as well.

That's what I was gonna bring up next.

So you took my question.

So you are going to... You want everybody to have an opportunity?

- Absolutely, I think it's one of those that ideas are stronger, the more diverse the viewpoints that come in to solve it.

- Yeah.

- And so that's one too, this is gonna be a flash in the pan, unless every corner of the community is involved.

So it's one of those that unless we get everyone to the table thinking through ideas, these challenges, how are we gonna solve it, what's the best solution for that, working together, it's gonna be just this kind of nice idea.

Let's chase it works for a few years and then kind of fizzles out.

Every component, every corner of the community has to be involved.

- And if you think about it too, it could bring the community together.

And I think that's what we need right now.

We need that compassion piece.

We need that piece of helping each other out.

Pre-COVID we had issues, COVID now we have issues every community does.

And I think it's time to put some of the garbage you know, mentality behind us and say, "You know what?

I want that person to win.

We need this person."

We have to have that business on the corner street or that grocery store over in that neighborhood or this idea over here.

And I think in talking with Bill McDowell at Bradley, we spoke about that.

I know you know Bill, but we talked about having all of these different entrepreneurs being able to have an opportunity to live a dream.

- Right, right.

Essentially, I mean, so you bring up a point of being able to help others.

I mean to really drive a strong, vibrant entrepreneurial community.

Everybody coming to the table and thinking give before you take mentality is so important.

So if I can help you and mentor you and give you some guidance before I say, "Okay, what's in it for me?

Am I gonna get equity in your company?

Am I gonna get something else in return?

That doesn't help drive this culture.

And we've gonna go through that cultural shift.

And I think there's an excitement in the community where, yeah, I wanna help, doesn't matter what's in it for me, I wanna give to the community.

- Well, I think after our call last week, I was... My mind was going everywhere.

And at the end of the day, I said to myself, "I don't know how I can help but I want to."

And I think if the way you are painting this picture because you can take the corporate partners and put them to the side, they want what's best for our community.

And that's what you wanna 'em to do.

It's not just selling tractors or healthcare or it's really having a healthy vibrant community.

- Absolutely - That's what it's about.

- And it's like back to the question of what can I do even if I'm not an entrepreneur in spirit and want to start a company, there's a lot of other roles that can play into an entrepreneurial community from mentorship.

So everybody's got background that's gonna funnel into those ideas and strengthen the ideas to serve as partners whether it's accountants or attorneys or others.

I can support it.

- What I wanna do is I wanna have you back because I still have a lot to talk about the mentoring piece, especially but Paul Leamon with Distillery Labs, what a great guest.

Thank you for all that you do.

Welcome to Peoria.

I'm Matt George, and this is Business Forward.

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