Arizona Business Gazette – November 2014

Robust home
Homebuilding in Gilbert and
Queen Creek is robust, although not at the pre-recession boom level, officials of the
two towns say.
Page 3
gives boost
to craft
Tech company
grows as
demand rises
for skilled,
flexible firms
For years, big-name distilleries
have dominated the market, but now,
craft distilleries, which specialize in
smaller-batch, handcrafted spirits, are
increasing at an exponential rate in the
U.S. and, recently, in Arizona.
Among the first craft distilleries in
the state, Arizona Distilling Company
was started in 2012 by Tempe residents
and Marcos de Niza High School graduates Rodney Hu, Jason Grossmiller,
Jon Eagan and Matt Cummins. Hu had
been in the bar business as owner of the
Yucca Tap Room. Grossmiller and
Cummins took seminars at Michigan
State University, which were instructed by German stillmakers.
“They pretty much taught you the
whole process and let you work on all
Invidasys’ Sherwood Chapman co-founded the health-care IT company in 2009 with an eye toward growth, efficiency and customer service.
Health-care IT: Agility counts
Invidasys Inc. CEO and co-founder
Sherwood Chapman remembers when
he first entered the health-care sector of
information technology 20 years ago and
was taken aback by the amount of paperwork.
It was 1994, and Chapman had just
formed his previous company that was,
like Invidasys, a health-care information
technology business named Quality Care
Solutions Inc., or QCSI. The young company was operating out of an office complex that, at the time, housed the healthplan operations for Casa Grande Regional Medical Center.
“Nothing was electronic. It was all
paper,” said Chapman, who already had
years of experience in computer science and technology. “It was surprising
to go back in time, working in a healthcare setting.”
But it gave him a crash course in
See IT, Page 14
Real estate................................Pages 2, 3
Entrepreneurs.........................Pages 4, 5
Regional report.......................Pages 6-8
Legal news ......................................Page 9
Stocks ......................................Pages 10-13
Copyright 2014, Vol. 134, No. 47
Established 1880
what these professionals needed to do
their jobs efficiently and accurately.
Working adjacent to the very people
they aimed to assist was the solid ground
that ultimately led to Invidasys, which
he launched in 2009, with partner Kent
LeFebre. Most of his current team was
with him at QCSI for at least 10 years.
“How to pay a claim was a complicated task. But, (operating) in a health plan
(environment), we spent time in each department finding out what they do,”
Chapman said. “We learned about health
care by fire. It’s not the typical way, but
it’s the reason why my team understands health care.”
Invidasys’ technology solutions help
public and private health plan administrators cut costs, improve efficiency
and simplify complex compliance issues, resulting in insurance companies
saving millions of dollars in penalties
and successful claim admissions.
The industry may not be flashy, but
Invidasys Inc.
Where: 2500 S. Power Road, Mesa.
Employees: 29.
Interesting stat: The health-care information-technology industry is projected to experience 22 percent growth from 2012 to 2022,
according to the Bureau of Labor Statistics.
Details: 480-792-1950,
“I thought the market needed more
departmental functionality, not a large
corporate structure that was unyielding
and complicated,” he said.
Chapman initially viewed Invidasys
as a side project. But word-of-mouth and
steadily increasing demand put a wrinkle in that plan.
“We thought we’d work two days a
week and golf the rest. We never got to
the golfing part,” Chapman said as he
chuckled. “People started calling saying, ‘We hear you have a solution for this
...’ ”
Two months ago, Geoff Moe, vice
president of reporting analytics and
medical economics for CenterLight
Healthcare, started working with Invidasys. Moe’s boss met Invidasys repre-
sentatives at a health-care event and
reached out to the company after the relationship with the previous firm failed.
CenterLight is an organization that
manages long-term health-care services
throughout New York City and Long Island. Moe said he and his company have
been pleased with Invidasys’ customer
service, from adhering to deadlines to
the helpfulness of everyone they’ve
dealt with. He also appreciates their
flexibility, a rare quality in the healthcare IT industry.
“Everybody I’ve had interaction with
has been very service oriented, and that
hasn’t always been easy to find, especially in the IT space,” Moe said.
A native of Maine, Chapman earned
his bachelor’s degree in computer science from the University of Maine after
serving in the Air Force. His wife is an
Arizona native.
Being small and nimble, Chapman
said, has been vital to Invidasys’ growth
and success over the years. Taking the
time and effort to listen to clients also
has gone a long way.
“We’re a very agile shop. We can be
responsive and react quickly when
things aren’t right,” he said.
T H U R S DAY , N O V E M B E R 2 0 , 2 014
Continued from Page 1
it’s a rapidly growing field, especially
with Affordable Care Act requirements.
Invidasys has clients in 10 states, and
revenues have grown between 80 and
100 percent year over year since it
opened, Chapman said. Last year, he had
16 employees and is looking to double his
current staff of 29 next year. He also
plans to move his Mesa company to a
larger space, which would be the fifth
relocation in the company’s existence to
accommodate growth.
Chapman and his wife, Laurie-Anne
Chapman, funded the initial investment
that got Invidasys off the ground. It has
been self-funding since 2012.
Under Sherwood Chapman, QCSI began as a startup that he eventually sold
to a technology company for $150 million in 2007. Chapman remained on
board for a while but eventually left.
He reached out to his European contacts in 2009, letting them know they had
parted ways. Hearing their dissatisfaction with what had become of the company they once were pleased with, Chapman thought he could help. But this time,
from the position of the little guy who
could be flexible with crafting solutions
customized to their requirements.
Continued from Page 1
the stuff,” Grossmiller said. “We fell in
love with it.”
Grossmiller then took a distilling
course at Dry Fly Distilling, based in
Spokane, Wash. He took notice of the
popularity of their craft spirits when
people were lined up around the block at
4:30 a.m., waiting for their first whiskey
“That’s what really lit a fire with me,”
Grossmiller said. “So, I thought coming
back, why can’t that happen here?”
Grossmiller had been a blackjack
dealer for 14 years and was looking for a
new career. Once his 401(k) reached a
point where he could invest capital, he
quit his job and launched the distillery
with Hu, Eagan, Cummins and Hu’s cousin, George Yu.
“We wanted to do it in Tempe,” Grossmiller said. “That’s where we grew up.”
Arizona Distilling Company rented an
old welding facility from Northstar Pipeline in Tempe, where it distills, labels and
bottles each spirit by hand. It is the first
whiskey-producing distillery in Arizona
since Prohibition.
“We’re a real small company, basically four guys,” Grossmiller said. “Two
guys are in here making the stuff and
two other guys are hitting the streets
with our product.”
Since opening, Arizona Distilling
Jon Eagan (left), Jason Grossmiller and Matt Cummins helped created Arizona Distilling
Company, the first locally grown grain-to-bottle distillery in the state.
Company has released a Copper City
Bourbon (the state’s first legal bourbon),
Desert Durum Whiskey, Desert Dry Gin
(which won a silver medal at this year’s
Gin Masters competition in London) and
100 percent Blue Agave Spirit Tequila. It
uses Arizona-grown grains from Casa
Grande and plant-derived products for
the gin are sourced from Mount Hope
Foods, a Cottonwood distributor.
“Every one of our products should
showcase something reminiscent of Ari-
zona,” Hu said. “Whether it be through
the grain, the label designs we’ve done or
through the collaborations of who we
work with.”
Recently, Arizona Distilling partnered with Four Peaks Brewery to create Humphrey’s Whiskey, named after
Mount Humphrey, Arizona’s tallest
peak, north of Flagstaff.
“We talked about the project a couple
of times, and then we all kind of discussed it and said we were ready,” he said.
“So, we had a lunch meeting, brought up
the idea, and Jason talked to them about
how he wanted it.”
Andy Ingram, co-owner of Four Peaks
Brewery, said they all met in the middle
to create a good recipe for the collaboration. Four Peaks created the mash for the
whiskey at its Eighth Street brewery,
then Arizona Distilling Company distilled and aged it.
“As far as I know, we are the only ones
that have done it in the state so far,” Ingram said.
Ingram has noticed that there has
been considerable crossover in the
craft-beer and distillery industry.
“If you have a craft brewery, you have
80 percent of what it takes,” he said. “It
sounds like a pretty natural progression
to me.”
Bill Owens, president of the American Distilling Institute, said craft-brewing and distilling partnerships can save
more than $50,000 in capital investments, because they are using the same
fermentation tanks and grain silos to
produce beer and whiskey.
“I advise people to do that all the
time,” he said. “Craft distilling has a
very similar projectory to craft brewing.”
About 10 years ago, there were 83
craft distilleries in the U.S. Now, there
are 717, with a 30 percent growth each
year, according to Owens.
The increase in craft distilleries is attributed to a “food renaissance,” Owens
said, in which consumers are embracing
locally sourced products.