By Michael Swanger

Sunlight dances on the quiet, snowy farm field at the corner of Grand Avenue and South Jordan Creek Parkway in West Des Moines while Ryan Lebo talks excitedly about building StereoType, a 3,060-seat concert venue there. It’s the morning of Black Friday, and a few miles away, thousands of shoppers (and potential concert-goers) scurry through Jordan Creek Town Center to get the jump on post-Thanksgiving sales while Lebo checks his list of things to do to make his dream venue a reality.

“West Des Moines thinks it’s the perfect location for this venue,” he said.

If Lebo gets his way, the parcel of land would be home to StereoType Entertainment Corp., which would host rock, country and hip-hop acts, as well as a restaurant, bar, retail and office space, lofts and a hydroponics garden as early as next year. Equally important, Lebo said, his business would help reduce property taxes and Iowa’s brain drain.

“Over the years, I’ve watched about 90 percent of my friends move away,” said the 30-year-old Clive resident. “We have an ideal, affordable place to live in Central Iowa, but few entertainment options where the price is equal to the value of the show.”

Lebo said StereoType would not only be the first of its kind in Iowa, but the world, promising fans low ticket prices and recordings of the shows they attend. It would also be the culmination of years of preparation, and a testament to his tenacity.

Lebo last year tried to pitch the idea to Des Moines officials in hopes of beefing up the Capital City’s nightlife, pairing down the tax burden of property owners by promising millions of dollars for tax relief, and funding scholarships to retain and attract young workers. But Lebo said partisan politics by city leaders and the Des Moines Music Commission (DMMC), an advisory board to the city council, prevented him from formally presenting his plan. So he’s working with officials in West Des Moines to build the facility there.

“I met with Mayor Frank Cownie, [city councilman] Chris Coleman and [city manager] Rick Clark. They told me ‘good luck,’ that I needed the blessings of the DMMC,” Lebo said. “But the DMMC passed on it because they have their own agendas.”

The building’s location is the first of many hurdles Lebo must clear to get his project off the ground. West Des Moines officials and music insiders are cautiously optimistic that Lebo can secure the $33 million in loans needed to complete the first of his two-phase, $50 million plan to construct a venue that would also hold 8,000 to 13,000 people for outdoor concerts and festivals like the popular Vans Warped Tour. Lebo is confident he can secure the loans once he gathers a board of directors as required by lenders. He is in the process of scheduling appointments with members of popular rock groups like Slipknot, Sound Proof Coalition (SPC) and Facecage to gauge their interest in joining the board or being advisors.

“They’re just some of the people I have in mind,” he said. “We have all the talent in Des Moines necessary to get this done.”

In addition to those and other hurdles, there’s also the matter of a lawsuit that likely won’t go to trial until next summer. Lebo has sued the architectural firm RDG IA Inc., alleging that one of its employees, Thomas Wright, illegally shared his business plans with Jason Walsmith — a member of the DMMC and co-founder of The Nadas and Authentic Records. Wright and Walsmith, who signed Lebo’s confidentiality agreement prior to the alleged incident, are also named in the lawsuit. In it, Lebo claims that Walsmith stole his idea for StereoType as outlined in a Sept. 15, 2006, story published by The Des Moines Register in which Walsmith discussed converting his parents’ downtown Des Moines Lovejoy building into a concert venue. Lebo said Walsmith’s plans were identical in many ways to his. The lawyers for the defendants deny the allegations.

The plan

Imagine paying $20 to see Widespread Panic, Green Day or the Red Hot Chili Peppers, then purchasing a professional recording of the show for a nominal fee. That’s the impetus behind the business plan for StereoType that Lebo submitted to West Des Moines on Nov. 13. He said a low ticket price encourages a large enthusiastic audience, which fuels the band to play an energetic show, which makes for a better live recording to sell online.

“It’s the future of music,” said Lebo, noting his revenue sharing generates profits for everyone involved. “You either have to increase your ticket prices to keep up with the current model or decrease your profit margin. But with my plan, I can subsidize ticket sales with online sales of MP3s [5.1 surround sound], video streams, video downloads, DVDs and merchandise [T-shirts, posters, etc.] because Internet sales aren’t taxed,” adding only online ticket sales will be taxed.

Sales of video and audio downloads will grow exponentially Lebo said, noting that only two shows per month will be streamed by video in the first year of business where customers can choose between five “fan cam” angles. The number of shows offered via video will increase each year by two shows per month, until the fifth year when all shows are streamed. By that time, Lebo hopes to sell about 165,000 DVDs annually, each at a cost of $25. “I focus on what the band can get out of the show,” he said. “And at my prices, it will allow me to compete with iTunes.”

Distributing copies of a band’s live performance used to be relegated to die-hard fans like those of the Grateful Dead who traded amateur bootleg recordings. That culture has grown with the advent of the Internet and popularity of jam bands that allow fans to tape their shows, though by most industry standards such unauthorized recordings are considered taboo. Artists and record companies claim they lose millions of dollars in sales to music bootleggers and pirates. To protect StereoType’s recordings, the venue would utilize digital branding including the placement of logos on videos and chimes on audio recordings and other security measures.

Lebo said he wants to partner with bands to sell their performances online, creating a legal retail opportunity. He said bands would not have to agree to be recorded to play StereoType’s indoor 3,060-seat concert hall or its 8,000-13,000-capacity outdoor pavilion. But after talking to record companies, bands and performing rights organizations like BMI and ASCAP, he said everyone has embraced his plan. The kicker, he said, is paying the band 40 percent of the gross earnings from sales of their recordings, more than what they would get from their labels.

“No other venue can compete with this kind of revenue sharing strategy,” Lebo said. “The reason is no other venue has everything in house,” including promotion, recording, marketing and Web site distribution.

Lebo said minimal outsourcing grants him flexibility to set his own prices, which will help attract customers from as far away as Minneapolis, Kansas City, Omaha and Chicago. His goal is to book about 10 shows per month and to sell VIP and skybox seats, too.

“[Those] cities have marketed to us, enticing us as consumers to travel to those cities for entertainment,” Lebo wrote in his plan. “We spend money in their restaurants, hotels and shops. Now it’s our turn to reverse this, and entice them to come here.”

He wants to utilize the expertise of Iowa State University’s agricultural and electrical engineering departments, as well as Iowa Thin Film Technologies, to design StereoType “as close to a zero electrical energy building as possible,” utilizing solar panels and other “green” building methods and materials.

Lebo’s “green” ideology also applies to Harmony, the venue’s proposed 200-seat, seven-day-a-week restaurant with a three-season outdoor patio. It will serve seasonal soups, salads and sandwiches made in part with fresh produce grown on site.

He also wants to spur additional homegrown ingenuity by establishing a scholarship superfund to attract some of the brightest young workers to StereoType. The venue would employ 80 workers the first year and 180 when completed. In addition to that, Lebo promises to donate 1 percent of his non-profit revenue to local children’s organizations and charities; and use his 800-seat adjoining club, the Beet Bar, to promote local bands.

“Everything we do will help the community,” he said.

Such ambitious plans, however, have been met with skepticism. Lebo said Des Moines officials doubted his ability to raise money. It’s also a concern West Des Moines officials have. Lebo said the council and mayor have embraced the idea of StereoType, though they have not officially adopted his plan.

“Clearly the city doesn’t want to take any risk on private ventures,” said Scott Sanders, assistant city manager of West Des Moines. “It’s more of a matter of making sure infrastructure improvements make sense for the region with any development.

“But it’s also a quality-of-life issue in terms of entertainment opportunities for the city. It fits with the business we do and the business we promote in our community… I could see my wife and I going to a venue like this to see shows. The idea is appealing.”

Lebo said he plans to use private stock, debt financing and, perhaps, grants to finance StereoType, though he knows that West Des Moines can’t afford matching grants like those offered by Vision Iowa. “I don’t want them to do that,” he said. “I want them to give money to hotels and other businesses to entice people. It’s a win-win situation for them.”

Chris Shires, West Des Moines development coordinator, said because Lebo isn’t seeking public assistance, like tax increment financing, it would expedite the process of approving the plan within two to three months. He said Lebo’s ability to find the right site to obey noise ordinances with outdoor shows would be the biggest concern, though not a problem.

“We can help him find the appropriate land,” he said. “On something like this we would look for something in an industrial district. But I think the plan is very interesting. The young man is very tenacious. It’s one of those ideas where you say, ‘Why didn’t I think of that?’”

Tom Zmolek, founder of Peoples Productions [People’s Court, AK O’Connors, Alive Concert Series] and member of the DMMC, said Lebo’s plans are “pretty grandiose” and they “aren’t rocket science,” though he did credit Lebo for having researched his plan, which he said Lebo presented to the DMMC despite Lebo’s claims otherwise. Zmolek’s biggest question about the project is whether or not it is feasible.

“If he has very deep pockets, it could be a viable venue,” the 42-year-old Zmolek said. “It’s very much like the Val Air Ballroom in size and scope. Anybody can come up with an idea, but without major financial backing, you can’t do it.”

Lebo said StereoType would be the Val Air’s “number one competitor,” but he wants to co-exist with it. “I would like to seek out Chris Cardani [Val Air General Manager],” he said. “I would like to partner with him.”

Sam Summers, a young local concert promoter who left the DMMC in August, said the live music business is struggling and that the timing of Lebo’s project might not be optimum.

“I would steer him away from opening a venue. It’s tough right now,” he said. “It’s awesome he’s being so ambitious, but nobody’s getting rich off the music business.”

Lebo said he is aware of such struggles, but points to his business model which “sets us above” because StereoType doesn’t have to cater to a niche audience or rely on ticket sales to break even. “People don’t want to pay for high-priced tickets,” he said. “That’s where our online sales come in.”

Lebo, who dropped out of Valley High School before getting his GED, said, “I have the data to back everything up. Everything is based on industry standard statistics.” He has three degrees from Des Moines Area Community College in restaurant management, entrepreneurship and culinary arts, and is in the process of completing degrees in business and marketing. He works part-time as a leasing consultant for High Pointe Apartments in Norwalk to pay the bills and “get experience in building management.” He’s also worked as a sound technician, DJ and music retail salesman.

“Granted, I don’t have a track record in the business, but I see all the people who do, and I want to bring them together to do this,” Lebo said. “The people I’ve talked to also realize quite a bit of the market is being underserved.”

“You have to give him a lot of credit. He’s done his homework,” said Sanders. “That’s what turned my head.”
Lebo is dedicated to his plan to build StereoType. But what if it fails?

“My only option would be to sell it, but I don’t want to do that,” Lebo said. “If I accomplish just one-fourth of my financial goal in the first year, I’ll still make a profit. The only thing stopping me at the moment is getting the board together to get the loans. As soon as I get the money, I’m going to open.”

Lebo vs. RDG, Wright and Walsmith

Chances are you wouldn’t be reading about Lebo’s plan to build StereoType if it wasn’t for his lawsuit against RDG, Wright and Walsmith.

“We tried to remedy the situation out of court so my plan could remain confidential,” he said. “If a large competitor like iTunes or Google gets a hold of this plan, they could accomplish it. That’s why I’m talking to you [Cityview], to get things moving,” adding “If they damage me financially by having to open up my plans to competitors with deep pockets, I would have to increase my damages. My whole goal is just to get the business going.”

In the lawsuit filed with the District Court of Polk County, Lebo alleges that in the spring of 2005, as an assignment for his business coursework at DMACC, he prepared an initial business plan for an entertainment complex in downtown Des Moines. On Jan. 11 2006, he met with Wright, an architect with RDG, to conduct a feasibility study of Lebo’s plan. RDG assigned Wright to the project based on Wright’s own musical background, which included a role as lead singer in the Des Moines band, The Rathbones.

Wright signed Lebo’s confidentiality agreement, and Lebo gave Wright a copy of his business plan to aid in the feasibility study. Wright allegedly expressed excitement to Lebo about working on the project. “Lebo’s business plan was not only very feasible for Des Moines, but also feasible for franchising to other countries and markets around the world,” court papers said.

The lawsuit states that approximately two weeks after their initial meeting Wright informed Lebo that his original estimates of $7 million were incorrect, and that it would be $50 million because it would have to include a parking garage.

On Sept. 12, 2006, Lebo met with Walsmith at a DMMC meeting to set up an appointment to discuss his business plan. Two days later, they met at the Lovejoy building, a two-story building at 12th and Mulberry streets in Des Moines owned by Walsmith’s parents. It’s the site where Walsmith’s father, Don Walsmith, operates All American Litho.

Prior to discussing Lebo’s plan, Walsmith signed Lebo’s confidentiality agreement. Court papers state “Lebo proceeded to discuss his business plan with Walsmith, who interrupted Lebo’s ‘pitch’ to inquire the identity of Lebo’s architect.” Upon hearing that Wright was Lebo’s architect, Walsmith advised Lebo that he and Wright are “good friends,” the lawsuit said.

The two men toured Lovejoy, and Walsmith told Lebo he had been working on his own venue concept for “about a year” and through Wright and Walsmith’s design, Walsmith “would keep a venue open in Des Moines and make a substantial profit.” At the end of their meeting, Walsmith advised Lebo that the DMMC could still endorse Lebo’s plan, so Lebo left a copy of it with him.

“Jason had a lot of things in motion before Ryan even presented his plans to the DMMC,” Zmolek said. “If he’s saying that Jason stole his idea, they can prove he had things in motion. The reason I know this is because he approached me to see if I was interested in his project, but at the time I was doing the same thing with People’s Court, so it didn’t make sense for me to get involved,” adding, “I don’t know if Jason’s project is moving forward. It’s been a little weird between us since then.”

The day after Lebo and Walsmith met at the Lovejoy building, The Register published a story on Sept. 15, 2006, regarding Walsmith’s downtown venue. The article outlined the main components of Walsmith’s venue, many of which Lebo claims are identical to his including the inclusion of a concert venue, restaurant, bar and VIP seating.

On Oct. 10, 2006, Lebo attended a DMMC meeting to discuss his business plan, but Walsmith allegedly adjourned the meeting before Lebo could speak. Lebo claims that after the meeting, Walsmith returned his plan to him and said the DMMC would not endorse it because it would be a conflict of interest because Lebo was his competition.

Lebo claims RDG failed to honor the confidentiality agreement, therefore breaching their contract with him, causing damages. He also believes Wright had full knowledge of the terms and conditions of his confidentiality agreement, took possession of his plan and gave it to Walsmith for him to use to complete his own project, and that Walsmith intentionally and improperly interfered with Lebo’s relationships with Wright, RDG and the city of Des Moines by blocking his attempt to gain city approval.

“Walsmith is using my business plan,” Lebo said. “It got leaked by Thomas Wright at RDG. He’s the lead singer for The Rathbones, who are friends of The Nadas. I went to RDG in January 2006. By that spring he had gone to Walsmith because he saw the value of the plan. He thought because I was so young that he would pass off the idea, and I wouldn’t do anything about it.”

Wright declined to comment to Cityview about the charges. Ed Remsburg, who represents RDG and Wright, said his clients “vigorously defend this case,” but would not comment further, adding “we’re bound by ethical rules what we can say.”

At a pre-trial hearing on Nov. 19, Walsmith also declined comment to Cityview. But his lawyer, Ed Skinner, said Walsmith is innocent of the charges, though a court order has sealed Lebo’s business plan and as a result, Skinner is unable to review it.

“I can’t reveal what I don’t know,” he said. “During discovery we asked to see what’s in them. We want to see the plans to know if there’s something similar in them. But it’s hard for me as a lawyer to see how opening a music venue qualifies as a trade secret. I’m at a loss to see how that can be,” adding that Walsmith plans to move forward with his Lovejoy project, though “it all depends on financing. That’s not in place, but he has a few investors, and he’s working on getting more at the present time.”

Skinner said it would be difficult for Walsmith to steal Lebo’s plan in the one day between their meeting and the following day when The Register published its story. “He would have to be a such a genius, he wouldn’t be looking to music for a career,” Skinner said.

Lebo argues otherwise. “Nobody questions where my plan came from,” he said. “The probability of Walsmith coming up with the same plan is so astronomically small that it couldn’t happen without a leak. In addition to that, he was arrogant enough to put the information out in the public [Register story], and think I wouldn’t do anything about it.

“Not only did he take my plan away from me, but from the community for tax revenue, affordable entertainment and attracting and retaining youth. Those are the things Des Moines has been seeking for years. The monetary damages are secondary. He and Wright will have to answer to their friends and neighbors for what they did.”

Taxes and politics

Lebo said when Des Moines rejected StereoType, it said no to potentially millions of dollars in property tax relief at a time when city leaders were trying to enact an unpopular tax strategy.

“My model makes more money per band, per show than Wells Fargo Arena, which has awful acoustics and Des Moines can’t fill consistently,” Lebo said. “Yet they didn’t want to hear how they could benefit from having a venue like mine.”

Lebo earlier this year pitched his plan to Clark and Coleman, both of whom did not return calls for this story, when the city was trying to secure votes for the proposed 1-cent sales tax known as Project Destiny. In July, however, 85 percent of the Central Iowa voters who went to polls rejected the proposed idea of using sales tax revenue to reduce property taxes.

“At least West Des Moines officials said ‘we’re willing to listen to you on the off chance you can get this going. It’s worth at least that much,’” Lebo said. “I got 10 minutes to talk to Rick Clark one time, and he told me I needed money. We were supposed to meet again, and he wouldn’t take the time. He sent an intern.”

George Davey, who founded the Web site No Local Option.com and who was a vocal opponent of Project Destiny, said he isn’t surprised Des Moines passed on Lebo’s plan because it would compete with Wells Fargo Arena.

“There’s an insider’s crowd in Des Moines, and if you’re not in it, it’s tough to get things done,” he said. “If they wanted the venue, they wouldn’t have directed Ryan to an advisory board. When they want something they just do it — like the arena and the hotel.”

Even if Lebo gets the financing to build StereoType, Davey and Sanders are uncertain stockholders will approve donating proceeds for property tax relief.

“It’s great that he wants to do that,” Davey said. “But I wouldn’t count the dollars until I see them. Most shareholders are greedy.”

“That would be unorthodox,” Sanders said. “We would need to be able to verify those claims and their ability to pay.”

Still, Davey said, Des Moines leaders should have considered the plan or brought it to a citizen’s forum. “They probably hate to see it go to West Des Moines, but competition is a healthy thing. It drives our market,” he said. “West Des Moines should roll out the red carpet. It’s a great plan and a great location by the mall and Wells Fargo [Financial}.”

Zmolek, however, said Lebo was afforded that opportunity when he spoke briefly in September 2006 to the DMMC. “He definitely made a full presentation of his ideas,” he said. “He had a package he handed out to us, and at the end of his presentation, he picked the packets back up.

“We get a lot of people who come to our meetings, but his presentation didn’t stick out in our head.”

Steve Gunson, Des Moines’ deputy community development director who oversees the DMMC, said Lebo spoke at a meeting, but couldn’t recall when. Gunson declined to comment to Cityview at the advice of the city attorney when asked whether the DMMC should have made more of an effort to work with Lebo or whether the DMMC is guilty of nepotism.

Summers said when he joined the commission he was told to “separate your agenda from the commission.” He also said nepotism is not a problem. “I’ve never seen that or got that feeling. If that were the case, it shouldn’t be happening because everybody should be allowed to talk. But I think they’ve done a good job helping others.”

Lebo disagrees. “Des Moines passed up my plan because I was not endorsed by the DMMC,” he said. “They wouldn’t help me because Walsmith wants to open his own venue using my plan, and Zmolek told me ‘you would be taking milk out of my kid’s mouth,’ referring to People’s Court.”

Zmolek denies he said that to Lebo. “I pulled him aside after the meeting and told him the official line of the DMMC was that it was a private business venture and that’s not what the DMMC was assembled to approve or not approve,” he said. “I thanked him for presenting, and I told him I needed to stay out of any discussion about his plan because at the time I was three-fourths the way into building a large venue [People’s Court], and I didn’t want any conflict of interest to be seen here.

“Ryan’s venue would be much larger than mine [People’s Court holds about 1,000], so it doesn’t hurt me,” Zmolek continued. “I have my own niche and fan base. There’s plenty of business to be had by more people.”

Before that can happen, Sanders said, Lebo needs to strike a balance between established business models and progressive ideas to get his project off the ground.

“It’s a struggle for politicians to envision entertainment for Generation Y,” he said. “It’s a struggle for them to even understand how the work environment is changing because of Generation Y. For Ryan’s plan to be successful, he needs older finance people, and people who understand the music business today. It’s a different business model from what we grew up on, and he’s on the leading edge.” CV

StereoType Entertainment Inc.

Founder: Ryan Lebo, 30

Location: Tentative goal to locate at corner of Grand Avenue and South Jordan Creek Parkway in West Des Moines.

Estimated cost: $50 million
Construction: First phase, $33 million, includes 3,060-seat concert hall with skyboxes, 8,000-13,000- capacity outdoor pavilion for festivals and summer shows, 200-seat Harmony restaurant (seven-day-a-week restaurant with a three-season outdoor patio), 800-seat Beet Bar (open Tuesday through Saturday, 4 p.m. to 2 a.m. and all events), hydroponics garden, ticket office and business offices. Second phase, $17 million, in second year includes retail shops such as coffeehouse, music or clothing store, and 10 lofts.

Number of concerts per month: 10

Cost of tickets: $20

Cost of live DVDs: $25, recorded by Pro Tools recording system called Venue utilizing five cameras and with 5.1 surround sound. Amenities for bands and crews: Three green rooms and one crew loft with bunk beds, showers, Internet access, one wall in each with all mirrors and private lounge.

Total number of employees: 80 employees first year, 180 employees by fifth year.

Board of directors: 11 members TBA.

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