Paul Spiegel on Turning an Accidental Pivot Into an Exit

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0:35Founders Forum is a radio show and podcast where entrepreneurs share their journeys, reveal the stories behind their successes, and the lessons they've learned. Join Mark and his guests for a mix of inspiration, valuable insights, and a bit of fun. Now, let's dive in. Good morning, America. How are you? Yeah. So with me today is Justin Tennant, who you may have heard his show already. He was founder and lead executive of a company that he has since exited called Surgical Product Solutions. Welcome back, Justin. Thank you. I appreciate it. And Paul is here, and Paul Spiegel, and I'll introduce him formally in a minute, but good morning, Paul.

1:17Good morning. Thanks for having me here today. My pleasure, Paul. And Justin is going to ask Paul a question that we actually discussed on the show that we did with him to start off our thought for the day, and then we'll get into Paul's story. Yeah, when this question was asked to me, I said, that's a pretty loaded question because I think, you know, we're living it and trying to figure it out as time goes. But the loaded question is, what's your experience with your post-transition? You know, what are you filling your time with? You know, what's your next ambitions after exit? Well, I sold the company in July of 2020, and I signed a two-year contract with that engineering firm that purchased us.

2:01So I would work for them for two years, and my company would become a division in their company. After the two years were up, they asked me to continue on, and so I stayed on working about 30 hours a week. And then just last year, I retired completely, which means I still work about eight hours per week. And I kind of get involved in the things that I want to. We're an environmental and energy conservation company. And so it's something I would probably be doing as a volunteer if I wasn't getting paid for it. Yeah, it's a passion. Yeah, and so I choose to get paid for it. No, that's great. Yeah, I think learning slowly how to have more time on your hands.

2:48But it seems like your work was your passion, so you would be doing it anyway. Yeah, and a lot of my employees were actually volunteers at different organizations. And so there's definitely a passion top to bottom for what we do, helping building owners reduce their energy consumption and reduce their environmental impact. There's a little overlap with your company there too, Justin, on that. Also, he had a very ingrained culture that continues post-exit, which is pretty cool. So Paul Spiegel is PE lead AP and founder, as we mentioned, of Practical Energy Solutions and was president for 15 years.

3:32And now he's senior energy advisor for Practical Energy Solutions, now a division of SSM Group. And Paul's got over 40 years of experience in commercial building design and construction and energy evaluations of existing buildings. The first 20 years were primarily spent as project manager for quality assurance on large, high-profile projects, which you'll know if you're from Philadelphia and you may know if you're not. The Pennsylvania Convention Center, Wells Fargo Center, which is now the Xfinity Mobile Arena, right? I was just there. I finally learned the name. It's had five names since we first started doing the design on the project.

4:14What was the original? Core States, I think, right? Yeah, Core States Center. Spectrum 2 Arena was also on. Oh, is that right? I don't remember that one. Anyway, Lincoln Financial Field, the Kimmel Center, the Borgata Hotel and Casino in Atlantic City, and Citizens Bank Park, and Wyeth World Headquarters, the CIRA Center, major commercial building in Philadelphia, among many others. The next 20 years were spent providing energy expertise and consulting to commercial building owners, and Practical Energy is providing ongoing support services for over 1 ,000 buildings in the region. So I want to start out with college because we went to the same school.

4:52University of Delaware. Yes, so you're a fighting blue hen, and you started out in chemical engineering but didn't end up in that, right? That's correct. Chemical engineering was a very competitive major at Delaware. there was 200 of us in the freshman class, and they only had room for 50 in the junior class. So they weeded people out pretty quickly, and I was one of the first to go. I wasn't the greatest student. You were weeded or wet out, weeded out. Yeah, the first day they said, look to your left, look to your right, look in front of you. Only one of you will be here in two years, and I started making plans then.

5:31That's even harder to law school. They said that to us in law school, but they just said, look to your left, look to your right. Yeah. I thought they only said that in movies. No, it was true about law school, and I'm sure it wasn't there, too. Yeah, so I kind of leaned towards electrical engineering over the next semesters and decided I didn't want to be an engineer, so I changed my major to business, and I took economics and changed my major my junior year and graduated semester late. But tell me if I'm wrong, but I think you've used a lot of engineering in your business. Yeah, and a lot of my business knowledge in engineering.

6:11Because I was hired by a company that hired me as an intern engineer as a summer job. And they liked my work, and I graduated during one of the great recessions that we've had. And so they offered me a job, and I learned the technical stuff on the job. something with engineering companies is they promote people who are really good engineers and make them managers, but they don't necessarily understand the business, the financial, the management elements of it. And so I did pretty well in that regard. You know what? I'm going to nominate you for Outstanding Alumnus at the University of Delaware in Engineering.

6:53Just kind of throw it back in their faces. Yeah, someone would get a good laugh out of that. That would be fun. So anyway, so you were plugging along, doing that kind of work. And where did the entrepreneurial bug come from, and when did you start Practical Energy Solutions? I always had the entrepreneurial bug. When someone asked me that question a few years ago about when did I start earning money, and my first job, I was 11 years old delivering newspapers. First, I would cut lawns. I caddied at a golf course. I did all three of those things myself. My brother and sister never worked until they were in college.

7:37And I had been working since I was 11 and always had something going on. But when you came out of school, you were employed for a while, right? Yes, I was employed for 18 years. So did that drive you crazy? I got promoted to management, and so I got to manage one of the big projects that I managed. My first project was the construction of the Wells Fargo Center. So you didn't mind sticking around for that, right? Yeah. I was a big Flyers fan, and being in meetings with Ed Snyder and the design team was just over the top. Yeah. Yeah. So then if you were having such a good time there, what caused you to break away and start your company?

8:25I had a headhunter come after me. There was a company that did the same work that we did, but they didn't have a local office. And they wanted to get into the local market here. And so they basically offered me a job to start an office, which is basically start my own company. I had to search for office space. I had to hire all the staff. So we set up an office in Broomall, and I worked with them for a little over four years and built it up. Within a month of opening the office, we signed a contract with the Eagles to monitor the construction of Lincoln Financial Field. And six months later, the Phillies hired us for Citizens Bank Park, and it just took off.

9:12We were up to 28 employees in like 12 months. So that was your company then at that point? No, that was a previous company. That was a previous company. And then I had an opportunity that came up through, of all places, Walmart. Walmart was a big client, and we did a lot of building evaluations for them. And they had an architect that went to all of their new stores and did an infrared analysis. and they were behind schedule on a whole bunch of them and they asked me if we could take care of that for them nationwide. And I called the CEO. I was like, you know, we have to get infrared equipment.

9:54We have to get all of this, all the people trained to use it. And he asked me, well, how much revenue did you have from Walmart last year? I was like, oh,$1.1 million. dollars. It's like, go buy the equipment, get your people trained and, you know, go for it. Right. And so that got me started in the energy business, which I had really no familiarity with whatsoever. Oh, so up to that point, you hadn't done that. I hadn't done any energy. It was all construction and design work on large buildings. It wasn't about sustainability or energy efficiency or any of that at that point. And I met someone at the training course I took down in Florida.

10:39I figured I'd train myself and then teach the people who worked for me. By that time, I was actually a professor at Temple University part-time. And so I was pretty confident in my training skills. Right. So, yeah. So we got the equipment and got things moving. And I met someone at that training that had started an energy company up in Vermont. and I was fascinated with his description of his business and I asked if he had ever set anyone up in business and he helped me get started, gave me some templates, gave me some things to train on. I spent my next two vacations up in Vermont working with him and by that point I was the regional vice president for this large engineering company and I quit my job to start a company with a partner that provided energy consulting services for large building owners.

11:39That was Practical Energy Solutions? That was Practical Energy Solutions. That was in 2006. So he had already established that company? No. His company was called Kilowatt. Okay. He just gave me support, and I paid him an hourly fee to provide technical support. I got you. And he provided some software tools and other stuff. I got you. Okay. So you started that. So describe what practical energy solutions did. Like if a new client comes to you, what would you do for them? The story has changed over the years because our initial service was just to evaluate how a building is operated and look at the systems that use the most energy and find ways for them to manage those systems better.

12:32So they weren't buying anything. They weren't paying for solar panels or buying geothermal systems to heat and cool their building. They just had to manage and maintain the systems and control them better. And we were going to do that for half the savings. So we would set their baseline energy use. And anything we save them over the next two years, they would pay us half. and it was one of those things that was too good to be true to some people and so if it sounded too good to be true, it must not be true. And so we had a little issue with selling that service and when I'd go in to talk about it, they'd say, well, do you do energy audits?

13:20And I'd say, no, we don't do energy audits. And that happened maybe five or six times and the seventh person that asked me, do you do energy audits? I said, yes, we do. He said, well, can you come into my 22 buildings campus here in Pottstown and help us? That was the Hill School. And help us save energy here because we're leaking money. It's a little parallel to you too there with learning how to convey the right message to who your customers are, right? Yes, 100%. Yeah. Yeah, and we figured out how to do it. Got some templates, did some red stuff. and actually became... Yeah, I think that's called fake it till you make it, right?

14:00Yes. I mean, that's the whole... Act like you know. Yeah. Did you have a follow-up question for Paul? Oh, good, okay. We only have about a minute to break, actually. So let me ask you this. We always ask about the challenges. So at that point, you started doing energy audits. And what happened after that? and what challenges did you face in the future in the business? Well, we got pretty good at doing energy audits and just that first project, it was 22 different buildings. But a challenge we faced was that no one had to get an energy audit where my previous business, every large construction project has to have a quality assurance company evaluating to make sure they're building it to the design standards.

14:54And so we had to first sell them on the fact that they should care about their energy use. And then from there, sell them on the fact that they should use us to do something about it. Right, I got you. So perfect opportunity to take a break. We'll be right back on Founders Forum. 20 years ago, Paul Spiegel founded Practical Energy Solutions with a focus on helping organizations make smarter decisions about energy, facilities, and long-term performance. Today, that expertise continues as part of Spots, Stevens, and McCoy. For two decades, our team has helped clients across healthcare, higher education, municipal, and industrial markets improve efficiency, strengthen resilience, and maximize the value of their facilities.

15:41As energy systems become more complex and infrastructure continues to age, organizations need practical solutions that connect energy strategy with engineering, infrastructure, and capital planning. And at SSM, we're proud to build on that legacy, helping clients create efficient, resilient, high-performing facilities today while preparing for the challenges ahead. Spots, Stevens, and McCoy, celebrating 20 years of energy performance and resilient solutions. We're back on Founders Forum with Justin Tennant as co-host today in the studio and Paul Spiegel as our guest. And Paul, we were talking about challenges that you had.

16:26Tell us about your company culture and how that was built and what, if any, challenges you had in regard to that. The first challenge that we faced is it wasn't the services that we were providing were not commonly provided by other companies. And so you weren't able to go out and hire an experienced person to come in. And so we'd have to hire someone that had what we thought was a background that fit well. And we hoped that they were able to step up and learn through the training we provided and learn about how to provide the service. But there were also people that I hired that, like the first person I hired, her name's Diane Heron.

17:09And she was our client contact in charge of the environmental committee for Westchester Borough. She was doing all the work for their environmental committee. And so I brought her on board. And she said, basically in our negotiation for how we would use her and what we would pay her, she said, I would work for you for free because I love what you're doing so much. I was like, okay, let's start the negotiation there and work our way up. And she still, even though she took a few stints away from the company, she was mayor of Westchester. She was our state legislative representative for two years.

17:47But she's back working for the company now. Oh, she is. Has been for a few years now. And she got it, I guess. She got it, yeah. She's taking care of some of our largest projects right now. I hired a couple of engineers, and one of them worked out amazingly. he's been with me his first job out of college. He's been with me for 16 years. So I'm thinking what was a difficulty finding people that had experience turned into an asset in a way because if they learn from you and they got this unique ability because no one else out there is doing it, they're probably pretty sticky in terms of wanting to continue with the company at that point.

18:29Absolutely. We were able to find a work environment as well as a subject matter that they really fit with and that they were passionate about. I had one of the engineers I hired, we wanted him to do computer modeling of building energy performance. And it means putting in all of the aspects of the building into this modeling software. and it would spit out what your energy consumption is going to be every hour for the entire year and got him some outside training on it. But then from there on, when we got a couple of contracts to do that work, he would come in on Monday morning and say, I spent all weekend on the users group asking questions and I learned this, this, and this, and now we can do this.

19:21And it was almost every Monday. He would come in with something new that he learned over the weekend. He was just driven because he just enjoyed that kind of thing so much. So I'm going to ask you a question out of curiosity because right now in the current administration, it's not exactly an environmentally friendly administration in terms of sort of tearing apart the EPA, things like that. Yet we've had other people on the show. One of them is Carbon Reforms, a company that I know you've worked with. And it seems that business is still oriented towards energy efficiency, clean air, clean water, all that kind of thing.

20:09What's your observation? Because obviously we'll get to your exit strategy, but your company had value. Somebody wanted it. Tell me how all that works in the current environment. What's driving it? I think it's a grassroots level commitment to doing something about both energy costs, but also environmental impacts of using energy. We see it in business because many of those businesses made commitments. A lot of the Fortune 500 companies have made commitments not just for their own operations, but all of their vendors as well. So that kind of holds their feet to the fire to show what they've been doing to improve their environmental impact.

20:56And also at the municipal level, a grassroots thing there is almost every township in this region has an environmental activities committee. and they're pushing their boards to do something not just in municipal facilities but to promote it within the business and residential community in their townships. So it's not driven from federal government. It's actually the local government that's pushing it. Yeah, and it's the citizens that are demanding it and some of the business owners are demanding it. Our biggest market has been municipal, where we do not only the energy assessments and show the cost versus the savings.

21:42We also help them teach their community members what they can do. And so we're doing outreach, community outreach. I'm speaking at events, open houses, and environmental fairs and other things like that. And it's been a really big opportunity for us. We've actually worked with, I've lost count, but over 80 municipalities just in southeastern PA. And there's no other company that I can think of that's worked with 10 or 5. And that includes the city of Philadelphia, which is like 50 townships. So they've got 690 buildings and they pay$30 million a year for electricity. And so if we can save them 10 % in any one year, that's significant.

22:34You've been working with the city for a long time, right? We won that contract in 2011. It was a four-year contract and they have to put it out every four years. Wow. And we won it for the fourth time or fifth time. And so we're still doing that. I kind of suspected that answer to the question because I'm dealing with it every day. Well, first of all, you both know that I live in a community part-time in Florida, Babcock Ranch. It's the first sustainable company and energy-efficient company, solar-powered, first solar-powered community in America. In fact, we have a whole series of podcasts coming out from the developer and the engineers that worked on it and all that.

23:17And that's, you know, in Florida's primarily a red state. I mean, it's not, you know, so it's not coming from the government. It's coming from, but I think in Florida, because it's on the coast and it's, you know, a lot of wildlife and all that kind of thing, I think it supersedes politics. People are just concerned about the environment there. Sure. It just seems like a thing. So I guess that's the answer. Also yesterday I was talking on Zoom to a future guest who's an entrepreneur, went to the Technion in Israel, and he's doing a lot of work with food sustainability, which is something that we talked about philanthropy, and my family's involved in supporting through the Technion, the Carrasco Food Tech Center it's called, which is all about feeding the world on an efficient and environmentally friendly basis and healthy basis.

24:16So there's all that kind of work being done. So it's really, really interesting. Okay, so anyway, let's get back to your story. So what drove you to want to sell the business? How did that occur? Let's talk about that. Well, I knew at some point that I'd have to retire and I hope to make a transition to something like a family-owned business and not a major international corporation, which is what I worked for before I started Practical Energy. And an opportunity came up where another full-service engineering company that provided pretty much every engineering service that we don't provide, and they had tried to start an energy group a couple of times and it failed.

25:04And so they were able to bring us in. It actually, there was a synergy because we had the same client base but different services. So they could now offer a new service to existing clients. And those next three years, our revenue, they were the three largest revenue years I've ever had for my company. and at the same time we brought some more new people in that were hungry and excited about the work and that were able to fit certain management roles. And so I was able to pull back a little bit. I think I pulled back. I went to 32 hours a week, but I think all that really happened is I got paid less.

25:52I didn't work. I didn't take a day off every week. Right. But the group that has now taken over, I went from 32 hours a week to last January, a year and a half ago, I went to four to eight hours a week. And I do things like this, and I speak at conferences, and I go to meetings. But you are sticking to the four to eight hours a week now? I am. Oh, good, good, good. I have one last quick question because we're almost out of time, believe it or not. Okay. I know you're a reader, and I know you're a lifelong learner. What are you currently reading? I'm reading a book called, I was worried that I would forget this, A Work Life Worth Living by Jeff Westfall.

26:34And it talks about how to turn your workplace into something that people are motivated by and feel energized by. And his company has been nominated and voted, won awards for Best Workplace in Pennsylvania, Best Workplace in Southeastern PA. and just an amazing company. He was the founder of Vertex, which is a computer tax software company. Yeah, familiar with him. Yeah, very interesting. So you're still at it. You're retired, but you're still curious. You're still learning. Yeah. You're still trying to figure it out. Yeah, trying to find new avenues that we can take and things that our clients can do.

27:14I love it. Paul Spiegel, thanks so much for being here today with me. Justin, thank you for joining us again. Thanks for having me. It was great. Good to know. Thank you all for listening. and we'll see you next week on Founders Forum. Founders Forum was brought to you in part by March Forward LLC. We partner with entrepreneurs like you to assist in accomplishing your future vision, your life, your business, your legacy. Comprehensive wealth planning that starts with you, not a product. We hope you enjoyed your time with Founders Forum and that you found something of value to take with you throughout your day.

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