Summary

Natalie Shmulik calls herself a Food Business Incubation Specialist, Creative Strategist and Innovation Anthropologist. She’s the CEO of The Hatchery Chicago, a Food Business Incubator. If you’re an entrepreneur, innovator or someone who works with a product of any kind, you want to hear what Natalie has to say. We cover a lot of ground including finding your why, the other exit, connecting with community, and finding balance. All in the highly demanding space of food innovation.

 

Innovation Trends

• There is an increasing blurring of boundaries at the intersections of industries, a move to all-in-one spaces – for example, the new Lululemon store in Chicago with a cafe, yoga and meditation studios or the Taco Bell Hotel.
• Eating habits are evolving, influencing changes in everything from vending machines to cookware to tools to how kitchens are designed.
• There is a move towards merging Health + Experience + Mindfulness + Optimization – health means more than what I eat. It’s the experience I get from what I’m eating. – that is influencing the development of things like craft brewed non-alcoholic beer and alcohol-free bars, and increasing use of things like adaptogens
• Consumers increasingly want to connect with the story behind the brand – how that story reflects their personal values.
• Sustainability and environmental concerns push brands to use more recycled and recyclable packaging, plant trees, and save bees.

Transcript

[00:00:08.160] – Rob Brodnick

Welcome to the Positive Turbulence Podcast story from the periphery. Here we journey to the edge to talk to Turbulator about their experiences creating positive change. Hi, I’m Rob Brodnick co-host.

Natalie Shmulik calls herself a food business incubation specialist, creative strategist and innovation anthropologist. She’s the CEO of the Hatchery Chicago Food Business Incubator. If you’re an entrepreneur, innovator or someone who works with a product of any kind. You want to hear what Natalie has to say. We cover a lot of ground, including finding your why, the other exit, connecting with community, and finding balance all in the highly demanding space of food innovation.

[00:00:48.000] – Karyn Zuidinga 

Hi, I’m Karyn Zuidinga. Your co-host. Natalie’s leadership is knowledgeable, passionate and grounded. We start our conversation exploring the change that the legalization of marijuana is bringing to her world and the kind of creativity that is happening around that. In our conversation, Natalie identifies a new periphery for all of us.

Food sits at the center of our culture. Food trends are societal trends. Societal trends are innovation opportunities. Coming up, an amazing conversation about food, innovation, connection and culture. But first, a word from our sponsors.

[00:01:22.220] – Sponsor Message

The Positive Turbulence podcast is brought to you by AMI, an innovation learning community that is celebrating 40 years of supporting innovation and creativity for organizations and individuals. AMI will be in Greensboro, North Carolina. March 25th through 27th this year, 2020. Please join us. You can learn more at aminnovation.org  Also, we would like to thank Mack Avenue Music Group as a contributing sponsor. To hear our theme song Late Night Sunrise and other great music. Visit MackAvenue.com.

[00:01:58.940] – Karyn Zuidinga 

Natalie Shmulik, CEO of the Hatchery Chicago. I get that right.

[00:02:04.040] – Natalie Shmulik

Yes, you did.

[00:02:04.880] – Karyn Zuidinga 

All right. What the hell is the Hatchery? And why are you in Chicago, Miss, I was born in Toronto.

[00:02:12.840] – Natalie Shmulik

Yeah, I get that question a lot, actually. It’s always funny to me when I’m at immigration and then everybody’s like, you’re supposed to be going the other way. What are you doing?

[00:02:26.190] – Karyn Zuidinga 

It’s a cool city. Come on. I mean, show some love

[00:02:30.620] – Natalie Shmulik

Everything that everyone says about the United States. It’s true. It’s the land of opportunity. And I think that this is truly the best place to launch and grow ideas. And I am a big, big believer that the food industry is one of the most powerful industries where you can truly make and see change the better at what better place to be than launching and supporting new launches of business concepts in the food industry right here in Chicago.

The Hatchery is a nonprofit food and beverage incubator. It was established out of a collaboration between two nonprofits here in Chicago. One is called Industrial Council of Nearwest Chicago  which is actually one of the largest and oldest business incubators in the country. They have a 416,000 square foot facility and they have 110 manufacturers. So huge, huge space, lots of ideas, lots of amazing things coming out of that facility. What they’ve noticed over the years is that there are more food and beverage entrepreneurs coming to them looking for food grade production space and support because there’s very, very limited access to commercial grade space. ICNC would open up their space and let people come in, build out of food grade space, but it’s extremely costly, it’s very time intensive and they’re building was not really intended for food and beverage manufacturing. Over time ICNC realized there’s clearly a demand here and it eventually became that the majority of companies producing out of ICNC where food and beverage businesses.

So they partnered with another nonprofit in Chicago called Accion  They’re a non-profit micro lender. They provide small business support and loans up to $100,000 to get businesses on their feet. They support a lot of women and minority owned businesses, and their primary portfolio is also food and beverage. It made great sense for the two to collaborate and launch what is now the Hatchery. We initially launched as a virtual incubator. We took our own advice on testing and learning as quickly as possible to see if the concept even made sense, if there was actually a need for our services and we realized there was. We spent a lot of time with entrepreneurs, with partners, getting a sense of what does the industry need, how do we play a role in all of this?

And what came out of that is just about a year ago, we opened a brand new facility in East Garfield Park on the West side of Chicago. The location was very intentional. We partnered with the city of Chicago to find a community where we could learn from them and they could learn from us and utilize the resources that we could provide. The West side of Chicago is one of the most unemployed communities here. There is a lack of access to nutritious foods. We really found a great opportunity to come into the community and tap into the great work that’s already being done with organizations like the Garfield Park Community Council that had the neighborhood market. They also showcase freshly grown produce through urban gardens and just work with the local community on those who either are budding entrepreneurs and want to launch a viable food business, get them out of their kitchens and support job seekers as well. Because the food industry has a lot of low barriers of entry where people from all walks of life can find great positions and careers available to them.

Our new facility is a 67,000 square foot food and beverage manufacturer based so big business. And it houses a lot of great, great ideas and collaborations. We have 54 private food grade kitchens. We have a large shared kitchen which where people get their start. People rent out by the hour, they test their concepts. And then we have a culinary training center called Impact, which is run by chef Rick Bayless here in Chicago. And that’s a great program for youth who are looking for culinary skill sets and long term careers. We do training for them with top chefs throughout Chicago. They then get a paid internship and an interview, which hopefully then turns into a long-term career opportunity. We have co-working space and event space. We have a full curriculum. It’s not enough just to give space. It’s really about creating the full ecosystem. How do we give you the tools you need to succeed? How do we get you the right people to connect with, introduce you to the right buyers and distributors? We have a full curriculum that provides that support. We run about one or two seminars or workshops a week. We run a monthly starting a food business class. We run monthly networking events. All kinds of exciting things really all happening under one roof to better. The food and beverage space,

[00:06:58.930] – Rob Brodnick

That’s incredible. The food industry is pretty significant in so many different kinds of activities, from the packaging to the labels to the performance of it to new kinds of things all along the way. I’m curious, what’s the model that you use for innovation? Is there a process that you trust and like or are you pulling from all the different methodologies? Given that there’s so many different kinds of expression within the industry, I’m really curious what’s in your head behind some of those? How do you keep it driven?

[00:07:27.310] – Natalie Shmulik

That’s a great question. I personally am a big believer in test and learn and Lean Startup Methodologies. We function as a startup for startups ourselves, so we’re not an incubator that’s here to say we know everything and we’re going to dictate what works and what doesn’t work. We actually learn from doing things ourselves, testing thing ourselves, and tapping into the knowledge and expertise from the startups who have had some success and who are working here and who are trying new things. So our facility to us is kind of a testing ground for ideation. We convert space very frequently. We realize, hey, there’s this new need or demand for particular type of operation, particular types of efficiencies around food production. So we utilize that and we actually adapt the space in order to better serve those ideas.

Because where a lot of ideas die — it’s not that we’re limited, there’s certainly no shortage of ideas, that’s without a doubt. We see hundreds and hundreds of new concepts coming to us monthly. The challenge is finding the way to manufacture and produce the products and new ideas that allow for a business to grow. So sometimes what happens is the technology hasn’t been able to keep up with the idea. So we may have this great concept in our mind, but if we’re trying to scale up manufacturing, most manufacturers have a fool-proof system and it’s really just designed to produce as much as possible. But there’s not a lot of room for testing and adjusting and testing out new shapes or new extrusion mechanisms.

What we try to do is we try to have a flexible space in a flexible environment so that if somebody does want to try something new, different, we’re able to adapt the space in order to do our best to accommodate that. A really good example right now is recreational cannabis became legal in Chicago in January, in the state of Illinois, actually. We are early days and it’s amazing to see the response, the communication, you know, everything that’s come out of that. And we’ve spent a lot of time. We do have a lot of CBD companies producing here. We started conversations with Cresco, which is a highly reputable organization. They launched an incubator. We’re hosting their information session here on infuser licensing.

So we are now thinking what role do we play here? This is something that’s never been done before. This is a whole new space to explore. We’re trying to keep a very open mind. How do we support the community and educate the community that wants to launch food and beverage businesses that are infused products or edible products?

That’s one way that we’re always thinking about it is how do we — instead of truly thinking of ourselves as a facility with these are the four walls we have to work within these walls — we kind of think ourselves as an incubator without walls, the space can be adjusted and shifted. The content can be shifted. The way we educate and support, the companies can shift. And so that’s important for us. We don’t always get it right. That’s part of it. I think that’s where us being comfortable and our whole team is comfortable with sharing ideas, trying ideas and knowing that not every idea will work and action discourage us from continuing to test and learn. That’s a really valuable tool for us.

We always also look at what big and small are doing, and that helps us with streamlining innovative practices here.

[00:10:46.210] – Rob Brodnick

What’s big and small? Tell us about that.

[00:10:48.310] – Natalie Shmulik

We’ve got the big staple brands. You’ve got the Kellogg’s and the Krass and ConAgras of the world, who have done remarkable things and really put a stake in the ground. And then you’ve got all the emerging brands and startups which are starting to take market share. They have this way of working quickly. They’re very agile, very innovative. The big brands are very keen on learning that entrepreneurial mindset and adopting that internally. The startups are also they have a lot to learn from these big brands on commercialization and scaling up production and food safety. I mean, there’s so much they can learn.

We’re in this unique place. We’re sitting kind of right at the middle where we work with the big companies and understand what it is they’re looking for and how they’re trying to innovate. And we also work with the startups and the early stage entrepreneurs. And what we’re trying to do is bridge that gap because we find that it’s really within the collaboration. It’s bridging those two mindsets together where we’re going to see a lot more traction and innovation.That’s happening a lot more now in the industry, not just within the industry, but outside of the industries where beauty brands are partnering with food brands. Wellness centers are being created.

In Chicago, you know, the new Lululemon space is remarkable. It’s not a clothing store. It’s really there’s athletic wear, but there is a meditation studio, there’s a yoga space, there’s a cafe, you’ve got everything in one environment. And so that’s exciting to see. I think those types of connections are what’s helping push innovation forward.

[00:12:17.940] – Karyn Zuidinga 

I’m hearing a really interesting thread of connectedness through that whole story. Connectedness with the community, connectedness with where you are physically with the community, connectedness with other businesses. I’ve spent a lot of time in tech in the last 20 years. And while there is a striving for connectedness there as well, it sort of seems to be connectedness within ourselves, within tech. A tech incubator might connect with an enviro-tech incubator, but not necessarily environment, period. I feel like you are quite deliberately reaching beyond just food.

[00:12:52.830] – Natalie Shmulik

Yes, that’s exactly right. And I think that’s part of it. One of the biggest trends that we’re seeing as a whole is this re-evaluation and redefining of what health means. If you Google the term healthy, you’re going to get a lot of pictures of salads. I mean, that’s really what’s going to show up, it’s smoothies and salads. If you Google the term health and you drop the Y, there’s almost no image of food. It’s very wellness oriented. It’s active, it’s sunset’s. It’s just it’s this mindfulness component of health. What’s happened a lot.

Really, we’ve seen a massive surge last year and it will continue to increase going into the coming years, is that sense of understanding that health means more than just what I’m eating, it’s the experience I get from what I’m eating. You know, it’s not, hey, I have to just stick with these juices and every day I have to have a bowl of spinach. It’s about I might get some satisfaction from being able to indulge in a very delicious nostalgic dessert, but I need to balance that out with other things. And that’s there’s this term called permissible indulgence right now, which is that. It’s the ability to understand that I’m going to get some kind of mental satisfaction.

And that element of mindfulness, you know, taking care of how we feel as much as what we look like is really important right now. And the only way to really get there is by expanding beyond just one industry. It’s really every industry. It’s medicine and health. It’s beauty, it’s fashion, it’s music. It’s all these industries play a role. And we see a lot more of that. We see those blending of boundaries. I was talking with my team today. We were talking about the Taco Bell Hotel. The ideas are wild. But as consumers, we’re hungry for that. We want to experience things. We don’t want it to be just surface value. We really want to feel valued and we want to put meaning to our lives. And the only way to do that is to really connect all the dots. I think that’s important. That connectivity that you’re pointing out is so essential.

[00:15:06.510] – Rob Brodnick

A shift occurred somewhere. I’m trying to think, you know, when did it happen from these single lines to something very holistic. So, for example, I can remember way back when if you wanted to eat healthy, it was all low-fat. And then if you wanted to eat healthy, it was all low-sugar and diet soda. We realize now that stuff’s poison. And so the result, these little things you could do. But now, all of the sudden, there’s this holism that has taken over. You have me thinking about that, but reflecting back when that happened but I really like it. Maybe you have some insight to that.

[00:15:38.910] – Natalie Shmulik

I agree with you. Yeah, I couldn’t even pinpoint the time. I do think it’s interesting where what happens is we have a lot of extremes in this industry, and all industry, where the pendulum kind of swings back and forth. And it goes from no fat is good. And now we see the Kito diet and all fat is good. I think it’s going to land somewhere in the middle. And that’s ultimately where the balance comes in.

Because there is a lot of that fad component, which is there’s just the extremes of — you know, I love what Peter Ray Hall said from RX Bar some time ago, where he talked about a few years ago, he was told you have to eat many, many meals in order to be fully functioning. And now he’s saying he’s being told not to eat, but to fast. You really see those extremes go back and forth. And I really do think that the balance of it all. I don’t think it’s one thing or another. I really think it’s a matter of just understanding what works for you and for your body, because everybody is different. And there’s definitely a focus right now on personalization.

And we learn a lot about biohacking. But it really is about that. It’s not a one size fits all. And that’s why, you know, these extremes do work in that timeframe. But eventually we have to keep moving on. What we’re discovering is that I might need a combination of things in order to achieve optimization in work and in life, and that’s going to come through my experimenting and testing and trying and from finding a balance with it all.

[00:17:05.490] – Rob Brodnick

Sounds like your mindset is let’s put this all together and see what comes out of it, because you definitely have that holistic mindset. I really appreciate that, but you have some intentionality to it. So there’s some turbulence in what you’re doing is creating some good positive results. Tell us about that.

[00:17:21.380] – Natalie Shmulik

That’s a great point. I do think that because everything can be so vast and there are so many ideas and, more so, there’s so much information, especially online. There’s just a lot of information and opposing information. I think it’s important to have intention and to have a guiding thread through all of this, because even in my work, I have to be very broad and keep an open mind to everything that’s going on.

But I try to ground everything into what is it that we’re trying to learn? What are we trying to achieve? A really good example of that is one thing that we educate our members on is understanding the why behind what exists. Several years ago, there was this surge in gluten free products and it seemed like everybody was going gluten free. There was a reason for that. But what really occurred is that many businesses that had gluten based products or wheat based products became very concerned and scared that there was going to be no place for their products in the market. And so they were desperately trying to adjust based on what the trends were telling them. Instead of really diving into why does that trend actually exist?

Because that’s when we get down to the bottom of how do we stay relevant? How do we market our products? And what was discovered, of course, at the time, less than two per cent of the population actually had Celiac. Why was everybody buying gluten free? There was a perception that it was healthier. Once we start to dive into, okay, so there’s a perceived notion that gluten free is healthier. Well, let’s look into it. Is it, in fact, healthier? Some products, yes, they are. Some products were well suited, alternatives to gluten-based products for those who had Celiac. But a lot of products were not actually healthier.

And so what we discovered out of that is there was this shift on education around grain based products. And then suddenly we saw brands that talked about sprouted grains and how it was easier for your body to digest the nutrition in those grains. There was talking about heirloom crops and grains. So, you know, non-GMO organic grains that would maybe be better for the system. Milled grains where, you know, here in Chicago we have Baker and Miller, so there’s kind of this going back to tradition. I think that’s important. It’s always going back to the why? Because there’s a lot of noise out there.

Without a doubt, there’s a lot of noise, a lot of information. We always have to take a step back and understand why. What’s the purpose of it? And if we’re going to share information on what we’re seeing, again, we have to understand why is it important? And why is it important to these startups? And how is it going to help them? I think that’s an excellent point. We always have to be able to have some kind of intention amidst what we’re working on.

[00:20:03.070] – Sponsor Message

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[00:20:33.550] – Karyn Zuidinga 

Can you dive in a little bit on how you help your entrepreneurs both connect to that why and then from that why, cut through the noise. The noise around food and health, it seems to be bigger noise, louder noise, to me, than almost any other sector I can think of because it’s so personal and there’s so much crazy information. How do you help your entrepreneurs work through the noise, not just market? I think it’s a deeper thing than just marketing. Yes?

[00:21:02.440] – Natalie Shmulik

There’s a couple of ways that we help these companies hone in on the why and break through the noise. And you bring up a really important point. This industry does have a lot of sway and there’s a lot of attention on this industry. And I think it comes down to the fact that it’s a very humanistic industry. There’s a lot more connection in the sense of people are actually ingesting and consuming products that are being made. And that’s a very personal experience and a very emotional and physical experience because we’re putting things in our body that actually create a chemical reaction. Which either make us feel good or don’t make us feel lousy. And that’s something that’s really fascinating. That doesn’t go away. Food is so intrinsic to who we are and it’s essential to life. There’s a whole new way of connecting with the food we eat and the brands that are feeding us.

For the entrepreneurs, a couple of things that we try to do is firstly focusing in on the why of them starting the brand. A lot of times it’s very difficult. As you know, being an entrepreneur is very isolating. It’s very turbulent. There’s just so much that goes on into investing who you are and putting all of yourself into a concept and then letting people give you feedback good and bad. We always try to remind the entrepreneurs, why are you doing this? Because if somebody comes to us and says, I’m doing this because I want to make a lot of money, because I’ve seen these companies sell, that’s not a reason there has to be a value connected to why you’re doing business. And we always communicate that and remind the entrepreneurs when they reach a point where maybe they’re struggling or they’re not sure whether to continue. Why did you do this? What struck you? What problem were you trying to solve that you had to launch this concept? And so always drawing back into that why.

And with that, also understanding why that business exists. What’s your differentiator? That’s so important because there’s so much out there. As much as there is information, there’s equally as many products. And if we look at it, you know, you’ll go down the aisles and you’ll see thousands of brands of chips. And if you’re launching a brand of chips and you don’t know what sets you apart, what makes you different. Why somebody should choose you over another brand of chips, then you’re missing an integral part of how to sell your brand and grow your business. So I think those two pieces of why are you here as an individual? Because I think the founder stories are so important these days. And one of the best things to come out of these last couple of years is we’ve put a face to the brands. It’s not just I don’t want to know why this brand started and who is behind it. I just like the taste of it right now. It’s I believe in what this brand believes in. And I want to support this brand. I want to support this female founder. I want to support this minority founder. I want to support this individual that’s trying to create job opportunities for coffee growers around South America. Those are such important stories. And so if you don’t know how to tell that story as a founder, then you’re going to struggle with really connecting to your consumers. So we spend a lot of time drilling that into these companies because not all of them will succeed. And that’s fine.

And not everybody needs to be an entrepreneur. I think sometimes what we see is that it’s very sexy and exciting to be the founder or the entrepreneur. But you can be entrepreneurial, working for a brand. You can be entrepreneurial in a Kellog. Sometimes it’s really trying to be accepting of that and knowing that you can play a valuable role with existing brands. You don’t always have to reinvent the wheel.

[00:24:49.930] – Karyn Zuidinga 

I love the sense of connecting with the why. I think that’s a trend that I’m seeing outside of the food world too. Whereas a few years ago in the startup space, in tech, they had an idea, they went with it because they could. They found that they could write some really cool bit of code that maybe worked on the blockchain, and wow that was really neat, but it was a solution in search of a problem.

[00:25:13.300] – Natalie Shmulik

Yes, exactly.

[00:25:15.040] – Karyn Zuidinga 

I love this ground to your why first and then go from there because that will always bring you back. As you’re talking I also start thinking about what are the hot trends are you seeing right now in food? We talked a little bit about cannabis infused foods. What other things are we seeing in the food world that listeners could start to look for?

[00:25:33.690] – Natalie Shmulik

One of the trends is the industry intersections themselves, spaces where you can get everything you need in one environment that’s going to continue to grow. We’re going to shift away from traditional retail environments into these fitness meets, food meets, co-working space meets, meeting ground. It’s really going to be these all-in-one environments.

We can see that with office designs changing, people are now working remotely. So where are they going to work if they’re working remotely? And I think that’s going to be an important tool to look at, because that’s changing eating habits. For one, people are actually trying to find better food in office. So that includes unique vending systems, cookware, efficient tools.

We have to rethink how homes are being designed. So kitchen designs are changing because we realize that different appliances are being used. And also a lot of people are ordering-in. The way we’re getting our groceries, the way we’re getting our food, design of space is a very unique trend that will be interesting to watch and observe.

A big one as of late is non-alcoholic beverages and spirit-free drinks. There is a company in London that’s opening the first alcohol free bar and we’re seeing more of that. There’s a company called Partake Brewing in Canada that’s doing non-alcoholic beer. We’re seeing a lot more focus on bitters and tonics and elixirs. CBD playing a role in that, too, where you can get a specific desired feeling without necessarily having to consume alcohol. That’s a big trend we’re seeing.

There’s also a lot more focus on mental health right now as well. So looking at ingredients like adaptogens that are really supporting mental health. I think that’s something that’s going to continue to grow.

Sustainability across the board, whether it be packaging, more environmentally friendly packaging. And I think the environment itself is dictating this. We see what’s going on in Australia. We see what’s happened in California. And people are becoming a little bit more aware of the impact that we’re having on the environment. And if we don’t take action, then we’re going to run out of a lot of resources that we need. So I think there is this more environmentally conscious approach from companies of all sizes. And many are making claims, you know, saying that we’re going to have completely recyclable packaging by this date. Or we’re going to have sustainable sourcing practices where for every tree that we are using for this product, we plant a new tree. We’re seeing Starbucks making those claims. Haagen-Dazs making those claims for honeybees.

Those are some of the bigger trends that we’re really seeing.

[00:28:18.780] – Rob Brodnick

I heard you recently give a talk and you use the phrase Food is Medicine. Tell us a little more about that. The intersection of food and health care perhaps is another space that’s thriving or about to.

[00:28:30.300] – Natalie Shmulik

It’s fascinating to see, especially insurance companies, get in on the food space. And BlueCross BlueShield has done a really good job at starting to explore what that looks like. Especially from what we’ve seen over time. Food is very healing. I’m personally I’m a big believer that what we eat, it’s preventative care. And then it also is very healing. There’s a lot of ingredients that are known to improve our health. What’s interesting now is there is a bit more of a shift around really looking at food as a tool to heal us and to prevent certain types of ailments.

Which traditionally wasn’t the case. It was, you go to a doctor and the doctor would say, you have this and you’d get a prescription for something. Right now, we’re shifting focus to realize that doctors can actually prescribe foods and diet. I think can really shift the mindset right now, too, because if we’ve grown up to believe that when I see a doctor and this doctor is supposed to cure me, they’re curing me with chemicals and medicine that is only dictated in a pharmaceutical fashion. But if we shift that mindset and if our doctor is now telling us, well, how about you try this particular diet, how about I prescribe you a healing shot of ginger, and oil of oregano, and lemon juice and Manuka, honey, those kinds of things.

I think that’s also helping the public re-evaluate our perception around what role food plays in our lives. It’s not just general sustenance. It’s about maintaining ourselves. It’s about improving our cognitive health, our physical health. There’s just so much that goes into it. And that’s exciting to me. I think it’s interesting to see how brands are taking note of that, too. And again, we have to be careful because a lot of times claims are being made that aren’t tested and aren’t necessarily backed. And we certainly don’t want the public to have misconceptions and feel that, oh, I could cure this by eating an apple. I mean, we really have to be careful about our messaging through all of this. But it’s important to realize that food does play an important role here. And to give people the opportunity to heal with amazing nutritionally dense foods, not just traditional medication.

[00:30:41.080] – Natalie Shmulik

That feels a lot like your why. I wonder? I was about to ask you. So we talked about connecting entrepreneurs with their why? How does a nice girl from Toronto wind up as the CEO of a food incubator in Chicago? And what connects you to that work? Why do you want to do this?

[00:30:57.950] – Natalie Shmulik

I have always been drawn to the food and beverage industry. I’m one of those unusual individuals who found a calling in this industry very early on and just stayed with it. And I’ve always had a sense of curiosity. My curiosity led me to just explore everything. I worked in food service. I worked as a cashier, as a waitress, as a manager. I ran my own restaurant, operated that space. I worked in food writing. I worked as a consumer education specialist for a supermarket chain in Toronto.

I decided there was something going on in the space. I went back to school and did my master’s in gastronomy and then worked in food marketing and cookbook publishing. I just really was curious what all the different factors of the industry are. During my studies, you know, it kind of opened my mind up to the space when I did a class on food and religion and we were learning about all of the different ways that food has actually impacted who we are and what we’ve become. And one of that is, you know, just the very simple story of the Garden of Eden and Adam and Eve. The one flaw that mankind was given was an appetite. And the one restriction was food. When you really think about that and dive in.

[00:32:14.060] – Karyn Zuidinga 

Sorry, I was shaking my head, but yeah.

[00:32:17.220] – Rob Brodnick

So 2000 years of disaster for us.

[00:32:20.530] – Karyn Zuidinga 

It started with food restriction!

[00:32:22.610] – Natalie Shmulik

It started with food restriction. It started with one, you know, you can’t have this apple. I just thought it was fascinating because that is a story that almost everybody knows. And if you think about it, if you think about us being created and within that creation, we are given appetite. There is a positive and negative to that in so many ways. And it’s more than food. This appetite is really integral to who we are. It’s what keeps people going. And to have appetite be so central to humanity and then one restriction, which is really food and that opposition. I mean, you can think about it for hours and hours. And I was just so connected to that and fascinated by it, because that’s truly how we are and why we are. It’s we have this appetite. We want to know things, too. Everyone’s searching for the meaning of life. What is the meaning of life? If we weren’t given that appetite and that sense of curiosity, we wouldn’t be where we are. Food plays a significant role through all of this.

If we look at even anthropology and history, words that we use are based from terms that we gave food. Mark Kurlansky has a great book on salt  He has an entire book on salt. And he talks about the Latin derivatives SAL. And it was actually where the term salad came from because they salted greens. Salaciaous. There’s so much of how we function as a society that’s based on food. It’s so fascinating to me because nobody can ever conquer this space. And I think that’s exciting.

This industry has accelerated at such a rapid rate right now. Just being able to capture some nuggets of wisdom along the way is really exciting to me. That’s really kind of why I got into the industry. But then as I moved along specifically with my experience of running a restaurant, I had never experienced such high highs and such low lows as being an entrepreneur. I realized talking with fellow entrepreneurs how there’s a lot that’s not discussed. We see a lot of kind of the shiny, bright side of entrepreneurship and how it’s exciting and it’s working for yourself and it’s being passionate.

But you don’t see the side of it’s extremely challenging. You can fall into severe depression. You can lose friends and family. There’s so much of it that you just feel alone and you feel so heartbroken a lot of the times. What I realized is that we have the opportunity at the Hatchery to bridge that community and bring everyone together. And have entrepreneurs find solace in knowing there’s other like minded individuals. And there’s a safe space for them to try their ideas and talk with other people who are going through the same thing. And that’s really, really important. It’s equally, if not more, important to providing technical support. It’s the emotional support. Because if you burn out as a founder, that’s it. You know, that’s how a lot of businesses go under. If you can’t keep going your business can’t keep going. And so you have to take care of yourself and you have to check in with yourself and make sure that you’re okay.

[00:35:34.940] – Karyn Zuidinga 

And it’s creepy, not creepy in that oh he’s a creep way, but creepy in that it creeps up on you. It’s something that you don’t notice for a long time. Until it’s way too late.

[00:35:47.280] – Natalie Shmulik

Right. You don’t realize. You look back and you go, wow, I haven’t slept. I haven’t eaten. I don’t feel good and I’m unhappy. Or to your point, you’re absolutely right, it kind of creeps in there. And then by the time you notice, it’s really hard to get out of that state of mind. For me, that’s a big why. It’s I admire entrepreneurs so much because you take so many risks and I want to create an environment for them where they can express themselves and share their knowledge and support each other.

[00:36:19.750] – Rob Brodnick

Thinking about the entrepreneurs and those that have the ideas that are ripe and ready and there’s things that you can do, sometimes it’s just get out of their way, but enable them and have them be successful. Occasionally, though, I imagine you come across the entrepreneur that obviously their ideas are just way ahead of their time. And I’m thinking back to the story of Nikola Tesla, who had some really genius things working and some good conceptualizations of the future of electricity. But, you know, Edison made it happen. And Tesla, well, he sort of goes down in infamy. So what do you do when its obvious that, like, you know, this is gonna work in 15 years, but the world is not ready for that idea. How do you manage that?

[00:37:03.130] – Natalie Shmulik

Well, it’s interesting because concepts and ideas that are ahead of their time are very exciting to me because we also get a lot of ideas around concepts that should not exist. And I think to your poit earlier, are trying to find problems to solve that aren’t really problems. You know, it’s just, hey, I felt like I should create this product because I don’t know why, but why not? I appreciate the concepts that are a little bit more ahead of their time than the ones that have not put in the right amount of thought and care and research.

We’ve definitely seen those concepts, I think in particular with a lot of the big CPG companies. What a lot of people don’t know is they are oftentimes the ones that have launched concepts or didn’t even launch a concept because it was so far ahead of its time. In most consumer packaged goods companies, they have what they call the graveyard of ideas. And those are all those concepts that somebody thought of that was great, but it just wasn’t the right time to get to market.

And I don’t necessarily have an answer for what the solution is for that. Because what we’ve seen traditionally is usually the company or individual that launches a new idea is not the one that’s successful. It’s the second or third brand that capitalizes on all the education and time that was spent getting that product to market that ultimately ends up becoming more successful. That’s not to discount those that are paving the way and trying to launch concepts that may be ahead of their time. How do we streamline that concept and how do we effectively get it to market? And some of that means finding the right investors, because consumer education is expensive. As well as consumer testing. So if we’re going to make a claim about if we’ve discovered a new ingredient that has the power to make somebody feel better or has more protein, how do we do those that type of testing, which is very expensive and time consuming?

That’s something that we are going to spend more time investigating, is what role we play in that. We never want to discourage someone from launching a brand or continuing a brand, even though it is very difficult to get consumer education. But I think there’s always room for adapting and pivoting as well. The challenge for us, too, is we never want to keep pushing somebody for an idea that is struggling, even though it’s a good idea. Because you could invest your life savings into that concept and invest everything you have and it just won’t go anywhere. Being comfortable with knowing when to stop, when to switch, when to go again, providing that kind of training on being very self-aware. We’re going to be running a workshop here on the other exit.

Because there’s been a lot of focus on this great exit when a company acquires you. But we don’t talk a lot about companies that went out of business and why. We spent some time interviewing entrepreneurs that did close up their business. And one of the consistent pieces of feedback we received from all of them is that they wish they did it sooner. It’s hard to let go. You know, it’s your baby. It’s everything you have and it’s hard to let go. But I think it’s important to continue that exercise of reflecting and understanding. Maybe I should close up shop. And I learned. And it doesn’t mean that I can’t do something again in the future, but dragging it on is also not a good idea.

[00:40:37.470] – Karyn Zuidinga 

I like that you used the word closure over the word failure. Sometimes you just have to stop. And that doesn’t mean you failed. It just means it’s time to stop. I was thinking of asking you your favorite success story. Maybe, we’ll get to that in a little while. But right now, do you have a favorite closure story? Like a business that you really like that just chose, now it’s time to stop.

[00:40:57.200] – Natalie Shmulik

There is one company. It was called the Chow Brothers  They are two brothers. Polish background had an amazing recipe for pierogies. Truly, I mean, amazing. I was such a fan of theirs. They opened up in a food hall in Chicago. Unfortunately, the structure of the food hall just wasn’t driving the right amount of foot traffic. And the two brothers are so motivated and you just wanted them to succeed. It took a lot for them to to take a step back and go, is this a viable business right now? They closed, I think, within the year of launching the food hall. They decided to close up shop. And that’s absolutely not an easy thing to do.

I appreciated that they really thought carefully about it. They exited gracefully as well. And it doesn’t mean that things are over for them. They’re kind of re-evaluating, exploring some other options. But I think that was a great story and just kind of seeing them get to a point, cause to me that was a success because they had launched initially. They had this recipe. Then they got the recipe to market. They were at shows. People loved it. Then they saw this opportunity to be in the food hall, opened up a spot in the food hall. I mean, all of that to me is very successful because a lot of people don’t even make it there. And that story and then deciding to close up shop was an important one.

[00:42:08.980] – Karyn Zuidinga 

Yeah. And again, you know, the other exit. I love that. Right. I think that that’s maybe a message that should be told out far beyond food and the Hatchery. Chicago. For any business, there’s another exit.

[00:42:23.610] – Natalie Shmulik

Yeah.

[00:42:24.230] – Karyn Zuidinga 

What about those success stories? The Hatchery has been around since… how long now?

[00:42:28.360] – Natalie Shmulik

So we’ve been around for four years, but our facility has just been around for a year now. So we’re still young. We have worked with some amazing and successful businesses. We can’t take full credit for them. A lot of them have launched. I think our success stories include just the environment we’ve created. We work with over 200 food and beverage entrepreneurs. And we’ve been able to support a lot of really well-known companies like Farmer’s Fridge and Tovala and Think Jerky, Victory Dance Foods.

A lot of these brands were early stage when we started working with them. They have amazing founders, amazing ideas and have grown immensely and we’re just excited to be along for the ride. Learning from them, supporting them in any way we can. And there’s so many more, including a lot of those in the community here in East Garfield Park. We’ve already seen some brands graduate. We have one catering company that graduated out of the shared kitchen, moved to a private kitchen space. We had a sponsored kitchen for a company called Taylor’s Tacos  They’re amazing. They’re two women founders. They were able to get the right funding in place in order to grow their business, which has grown immensely.

We’re seeing a lot more of that. We’re seeing a lot of individuals who were cooking out of their homes and selling products illegally. And now they have a resource because we offer them free membership. We offer discounted and some free shared kitchen use hours. So seeing those people get out of their homes and actually grow those businesses, it’s pretty incredible.

[00:43:59.890] – Karyn Zuidinga 

Amazing. What’s your future looking like? Where do you see this going? What’s your vision for, say, 10 years from now? Where you going to be?

[00:44:08.270] – Natalie Shmulik

There’s a lot of goals that we set for ourselves early on. One being job creation through this industry. We’re anticipating 900 jobs for the first 5 years of opening this facility and we’re well on track for that. So that’s exciting to see. In addition, we’d like to see some of those big success stories. You know, I launched at the Hatchery. I grew out of the Hatchery. I’m connected to the Hatchery. And we’d love to see those success stories of companies either, you know, growing out of our space into their own manufacturing facilities and building empires or having successful exits and acquisitions partnerships. We love seeing our partners bond together. Last summer, we had several of the female food founders come together and launch pop up shop together. And seeing that kind of camaraderie is so exciting for us.

I think what we’d also like to do is we want to try to support other initiatives similar to ours and prove this model so that it can be adopted in other cities, in other countries. We want to be that staple for food business incubation and show the value that we can contribute to these companies and help accelerate growth, help streamline as much as possible and help the community and the economy. And I think that’s going to be something that we’re really aiming high for. Whether it be things like food safety, which is really, really important, is we have hundreds of companies that will be producing out of our space and we want to ensure that every product that comes out of this facility is a safe product. We want to be the front runners to help design what that looks like and ensure that there’s practices in place that others can then take on and launch in their own communities, in their own cities. So I think that’s going to be really important for us is setting that standard.

And then I think eventually to playing a role in policy. I think it’s going to be important for us to take the learnings that we have here and better understand what policies help get these entrepreneurs and these businesses to where they need to be and which often impede and maybe need some tweaking. And so I think that’s that’s a rule that we’re probably going to play eventually down the road. But right now it’s a lot of learning and understanding and growing from there.

[00:46:28.620] – Karyn Zuidinga 

I love it, though. I love that sense of replication. Okay we can do it here and we’re learning a lot. But let’s do it somewhere else, too. Let’s feed, if you will, feed another incubator elsewhere and learn together. This was absolutely lovely, Natalie. I enjoyed our conversation.

[00:46:45.900] – Rob Brodnick

Yeah

[00:46:46.100] – Natalie Shmulik

Thank you so much. I enjoyed it as well.

[00:46:48.010] – Karyn Zuidinga 

There’s so much wisdom there for the entrepreneur. I’m sure we will see some wonderful things coming out of the Hatchery as time goes by. I will certainly, for one, be watching.

[00:46:56.880] – Natalie Shmulik

I hope so.Thank you so much.

[00:46:59.280] – Karyn Zuidinga 

All right. Thank you.

[00:47:05.310] – Karyn Zuidinga 

Thank you to AMI, who have nurtured us in developing this podcast is the source of so many of our guests and of course, the founder, Stan Gryskiewicz, is also the author of the original book and dare I say… the Jamie Oliver of Positive Turbulence. Stay tuned for our Positive Turbulence Moment where Natalie reminds us that no one starts at the top.

[00:47:26.220] – Sponsor Message

AMI is a pioneering non-profit organization comprised of committed individuals who foster and leverage creativity and innovation in organizations and society. AMI identifies leading edge innovation, shares, experiences, sponsors, research and recognizes innovation and creative processes. Find out more at aminnovation.org  And thank you to Mack Avenue Music Group our contributing sponsor for providing our podcast soundtrack, Late Night Sunrise.

[00:47:54.710] – Rob Brodnick

And here’s our Positive Turbulence moment.

[00:47:57.290] – Natalie Shmulik

It’s always important to understand that nobody started, you know, at this top level. Everybody really started from nothing and most of them tested out a lot of ideas that didn’t work. And so it’s nice to kind of go back to that foundation.

[00:48:13.010] – Rob Brodnick

If you want to share a Positive Turbulence moment or otherwise, comment on what you’re hearing, please drop us a line at podcast@PositiveTurbulence.com.

[00:48:21.050] – Karyn Zuidinga 

Be sure to tune in next time when we’ll be talking to Daniel Seeff, West Coast director of the Herbie Hancock Institute of Jazz and host of Excursions Radio on KJazz, 88.1 in L.A., the only hip-hop and jazz radio show in the world. Bring your cool. Head over to PositiveTurbulence.com to find out more about us, our wonderful sponsors, Positive Turbulence our guests or check out our very cool and very diverse reading, watching and listening to list.

Until next time, keep the turbulence positive!