Zac Darnell: Welcome to Behind the Product, a podcast by SEP, where we believe it takes more than a great idea to make a great product. We've been around for over 30 years, building software that matters more, and we've set out to explore the people, practices, and philosophies to try and capture what's behind great software products. Join us on this journey of conversation with the folks that bring ideas to life. Hey, everybody. Welcome to Behind the Product. As always, I'm your host, Zac Darnell. Joining me again, Chris Shinkle. Chris, how are you doing, man?

Chris Shinkle: I'm doing well. Thanks for having me again.

Zac Darnell: Thank you for joining me again for this convo. We had a great conversation with Ryan Larcom over at High Alpha Innovation. Chris, really quick, for just some quick context, what's your role at SEP?

Chris Shinkle: My role at SEP is the director of innovation. Interestingly enough, very similar to Ryan's and I think that led to some great conversation.

Zac Darnell: It did. It was really cool to see some of the overlap between the two of you and just hearing some of the bits of the conversation. What were some of your favorite things that you felt like stood out to you in the conversation with Ryan?

Chris Shinkle: I loved when Ryan was describing the process from idea to conviction, and he laid out that high- level process that he walks customers through. It's so context specific and it's so dependent upon the industry and everything you're working in, but even still, he had a high- level roadmap of where he was walking with customers. A lot of the things that we're doing with our customers which I thought was really cool, even though he's a little more of big corporate startup space and we are typically working with more existing products, to see the overlap I thought was really valuable.

Zac Darnell: I really enjoyed that as well. Just his experience and just very clearly articulated system of thinking through that space, I really enjoyed that part of the conversation. Chris, what did you think about his concept around innovation theater, I think, to use his words.

Chris Shinkle: I thought that was really interesting, because of my role at SEP and what I do with customers, a lot of times I'm involved in conversations, talking about innovation and what it is and how it works. It's just this word that has so many different meanings and perspectives. He gave us his definition, but then also talked about this common experience that him and I have both run into at Innovation Theater and just loved his perspective and take on that.

Zac Darnell: Yeah, it's always interesting when you kind of get into conversations with customers or really anybody and buzzwords start flying out and start to peel back the layers and really get into, okay, what's really going on here? All right. Give us one more favorite part of the conversation before we dive in.

Chris Shinkle: Well, one of the things I thought that Ryan was such in a great position to comment on was the Indi tech scene. We were with a lot of large companies, they've been around well established. Because of his connection with High Alpha, getting to see a lot of the startups, what's happened through Salesforce and all of that at VC, funding models and whatnot. I really appreciated hearing his perspective on the Indi tech scene, I think he used, so it was very bullish for Indianapolis and just the opportunities and what existed here. I just, I love hearing that as someone who's grown up in Indianapolis in the city, and just his perspective on what Indianapolis has to offer even more so than what you might find on the East and West coast and the number of opportunities that exist here.

Zac Darnell: Yup. He alluded to almost these hidden opportunities here in the Midwest, often overlooked. That's a good point. Well, hey man, thank you so much for joining me for this conversation. Thank you to Ryan. Big shout out there. Thank you for joining us. And I guess we'll dive into the show. Hey everybody. Welcome to the show. Joining me for the second time in a row, Mr. Chris Shinkle, how are you bud?

Chris Shinkle: I'm doing great. I'm excited today.

Zac Darnell: I know it's going to be a fun one because joining us as Ryan Larcom, a director at High Alpha Innovation. How are you, man?

Ryan Larcom: Hey, I'm great. How are you?

Zac Darnell: Doing well. I'm excited for this. You and I caught up a few weeks ago, and then I know you and Chris have not caught up in ages. So I'm excited to be a middleman for connecting to folks that haven't talked in a while. Should be fun for me.

Ryan Larcom: Yeah, it's good to be back together.

Zac Darnell: It's really good. Ryan quick context for those that don't know who you are and don't know much about High Alpha or High Alpha Innovation. Can you give us the runabout, tell us a little bit about you and about the business?

Ryan Larcom: Sure. I'm a mechanical engineer, industrial designer by background. Love making products that people love. I was lucky enough to transition into business strategy halfway through my early career, spent the entire time in automotive and industrial. Loved making those products. Felt frustrated though that we just didn't have enough of the customer voice in that process. And I was hoping that as a business strategist, I could force that in. People think to listen to the business strategists a lot more than engineers these days.

Zac Darnell: That's true.

Ryan Larcom: It is, yeah. But From there, I moved into tech. Tech just innately understands the opportunity to design with customers in mind. High Alpha was being formed. We were a venture studio, one of the first ones in the world and got to set up our studio model partner with entrepreneurs to walk them through a process of getting from idea to new business. And when we got the investment conviction that we needed, we'd launch those businesses, invest capital, provide shared services and help us entrepreneurs succeed at scale on their businesses over the next several years. So that's a lot on me. High Alpha Innovations spun out of High Alpha as a separate line of business. We identified an opportunity to partner with corporations for the exact same reason. My background in big co innovation recognize that there are just certain areas that corporations can't grow in scale. And usually that's when you have something net new. And so we wanted to take what we had at High Alpha, the venture studio model of launching startups and turn it loose on the coast.

Zac Darnell: Okay. I'm going to use the buzzword here. When we talk about and label corporate innovation, and for those of you that are just listening to this, I literally air quoted. That is a buzzword. I don't know. Can you define that for us, from your perspective, what does that mean to you?

Ryan Larcom: I think about innovation from portfolio perspective. Innovation first of all, is the creation of net new things that have value that someone will pay for. And across the portfolio, you've got R&D, probably the largest area in the function where the corporation does its own business. Increasingly R&D is focused on fixing stuff that's in the field, new product developments and rarely get into those brand new technologies or new product opportunities. It's becoming more and more inefficient to be able to do that though, like dollars per output over time. And then the next bucket is M&A. You can always buy something new when you need a new business model or to extend your existing business model. And sadly, that's becoming more and more inefficient as well. The valuations are going up, especially on tech companies. You're often betting the entire business on one of these acquisitions. And then of course integration is a whole nother mess. I used to be one of those corporate strategists who'd say we'd leverage synergies, and then leave it to the dev guys to figure out how you actually mashed it in. And so the new, new opportunity for corporate innovation and the smallest portion really of the innovation portfolio is for startups. The most robust corporations are thinking about a build by or a partnership strategy with startups so that they can expand into more of the adjacencies. R&D is great for expanding the core business, M&A is and near adjacency play, but for the opportunities where corporations really need to be transformative, either through the business model, the technology of the customers that they access, best way to do that is through startups because of the opportunities that they have to help a corporation learn.

Zac Darnell: That's interesting to me. Can you talk us a little bit about what those relationships could look like? I'm an entrepreneur, I'm talking to a big co about a partnership, what am I getting out of the exchange here? Is it just funding or is there more there to the relationship?

Ryan Larcom: There's really three ways I think startups and corporations can work together. The first is commercial and because they don't do this really well by and large, there are some who've really created a fabulous platform team that they use to integrate with their corporation. But essentially startup comes into the enterprise, wants to sell, usually that is through a POC. They partner together to do a proof of concept before they land and expand inside the enterprise and great IT teams, great commercial teams find a way to do that in a corner of the business that's not disruptive to the bigger business while they test something out. So that's the commercial agreement and you can just do various successful commercial agreements with big cos and become increasingly capable over time. The next is investment. Big corporations often with corporate venture capital arms, so a separate investment arm, will reach out to startups for the opportunity to do an investment. And often that comes with some kind of strategic request as well. That you're going to give us money and you're going to help us get to market, or and you're going to be a customer along the way. And great CVCs have figured out how to both give money and be great strategic investors. But the third is I think just building. Corporations have such a knowledge of the things that they need in the world, that there is no startup out there to solve for, and they've got capital for them to be able to take those assets and spin them out into a brand new startup that solves an issue that they've been willing to scratch in the world. I think that's a really cool opportunity.

Zac Darnell: So tell me where High Alpha innovations fits there. Is it the last model?

Ryan Larcom: I think the first two by and large are getting solved slowly over time. We're seeing corporate venture capital arms that have been around for 10 plus years, made it through multiple financial cycles now. And there's a there there, folks know how to do that. Folks do not know how to build brand new startups, but we believe that High Alpha innovation, 10 years from now that there will be a model where just like every company has a CDC attached to it, they've got a venture studio attached to them as well, so that they can be building new companies.

Zac Darnell: I'm assuming, over the last five, six years, however long you guys have been doing this, there's been a number of these examples. Tell me about maybe some of the, I don't know, gnarlier challenges that you've had with working with some of these, I'll use your term, big co.

Ryan Larcom: There's a couple of things that keep big cos from a really innovating, especially in the adjacencies. One of it is just knowing how far away from the core business model to place these new opportunities. There's lots of great opportunities inside a big cos, which ones are the right ones to spin out, I think is a really big question that we get a ton. Too close to business strategy, the core business should solve for that in some way or another. That's what R&D is there for, that's what M&A is there for, and they have to just go and solve those needs. And if someone else tries to do it right, they're going to pull it into the core because that's what the business needs to be successful. Too far away, and folks are like, "Why are you investing money or time doing this? Is Coca-Cola sneaker company? Why are we investing in sneakers?" That doesn't make sense either. There is a sweet spot in between, and I think identifying that sweet spot is the first challenge. And then once you define it, not letting the core get their hands on it. Having a really clear strategy that says, we're creating a net new thing. Well, we need a learning module, which is a versus we're creating something that just scales our existing business model while we need a scaling module and that's something that should be done inside the business. That's big challenge number one.

Chris Shinkle: I'm curious Ryan, customers come to us a lot of times and they're trying to innovate. We hear that word a lot. A lot of times it's in an adjacent area like you described, but traditionally because of the way the funding models inside the organization work, they've already had to make a business case. They've already had to identify a problem and solution, they've already had to secure budget. And so while they say they want to learn, search, experiment, whatever the word, startup lingo they want to use, they're really not. They want to learn assuming that they're going to produce something of value at the end. If they spend money and learn and produce nothing, that's not real interesting or not acceptable. They'd rather fail traditionally then to do that. I'm just curious. When people come to you and you engage, where are they at and how much do you need to help them rethink the way they fund this type of projects within their organization?

Ryan Larcom: It's a really good question, Chris, and we get them at both ends of the spectrum where you guys get them, where they're like, "Hey, we've got a business case, there's a team inside running this. We've already put a couple million bucks for it. It's just not getting the results that we want." And we also got ones where they're like, "Hey, autonomous vehicles are going to be a thing. We got to figure out what to do with that." So top of funnel, bottom of funnel. I think that mistake number two in this piece of the conversation is that folks try and fund it out of the P&L, just like capital projects are funded out of capital, this needs to be a capital expense. And the reason is, to your point, you don't know what the business model is. When you're building something that's brand new, part of the learning is trying to figure out what a repeatable, scalable business model is. And if you've got to put together a two year P&L just to secure funding, you're making up numbers that you don't know. Better to say, we're going to define success based on learning milestones, and we're going to fund you to your next learning milestone, the way that a VC does. Do that out of your capital budget. And then when you have something that's repeatable and scalable, well, then you figure out whether it's going to come inside the business and be funded off the P&L again.

Chris Shinkle: What have you felt like you guys have had to do from a business to frame yourself so people understand when they come to you, what they're asking? Again, we're framed more as a development partner and when people come to us, they're ready to start building. And it feels weird to say, well, hang on a second. Let's talk about business viability and feasibility and those types of things. I'm curious things you've had to learn that's helped frame your organization so that people come in the right door, so to speak.

Ryan Larcom: It's a really good question and something that we're still searching for as we try to define what is the product market fit between VCs, entrepreneurs and corporations? I think where we try to put ourselves is as builders, when you think about the opportunity, if it's an adjacency, if it's something that you don't yet know, where it gets far from experience set. And then specifically for us, because of our investment thesis, if it's B2B SaaS, it's going to be cloud software that sells to an enterprise as a primary customer, then we believe out is better than in, all the time, always. And we'll always approach it with that lens. Now, we've done engagements before where we're open- handed on what the other side of that looks like. It could be that, through discovery, it's better to be B2C or it's better be inside the business. But what are we architecting for at the beginning? Is we say, we're going to start a startup here for these specific reasons.

Chris Shinkle: So when you come in and a company hired you, I'm curious what the team makeup is, if there's a standard team that you bring into the engagement and then expands from there, but is there like a core products team or something that you guys tend to... a repeatable model that you use across different engagements?

Ryan Larcom: There's really three pieces to how we go about building startups. The first is discovery. We do a 12 week period with an organization to move from top of funnel. What's the opportunity? We think a venture lends to that opportunity. Corporations are really great about understanding the opportunity from their industry subject matter expertise, but really look at it from an investment standpoint. What are the trends that are going to shape this industry in the next 10 years? What are customers jobs to be done, and the ways that those are going to be transformed as a result of those trends? And so we take an investor's perspective to figure out, where would you put your money if you had to build something new in this space? And we match it up with what they've got. We come up with a ton of different concepts in that specific space, narrow those down rapidly and get conviction about 10 or so that we think are really transformative and interesting opportunities where the corporation can leverage itself. And we do that with a group of folks who look like business designers. So it's a relatively new term in the world, I think IDEO coined it. But the idea being that that Design, capital D, is a series of intentional choices, not just about the product or the value prop, but also about the revenue model and about the resourcing model. How do you make money doing this, and then how do you resource this startup to be successful? And we think about all pieces of the Design at that early stage with that organization. Once we get conviction around a business model that you could go about pitching, then you've got launched where we stand it up as a startup, that the folks who do that sort of work look a lot more like entrepreneurs, folks who have background in sales, customer success, product. And then we also bring the supporting services, piece three: finance, HR, talent, design marketing, to help them scale their businesses successfully after we know where those businesses are headed.

Zac Darnell: I didn't realize you guys did the full spectrum of staffing.

Ryan Larcom: Yeah. Over time, it's less and less us and more and more startups. We want to partner with the corporation through that, but then ultimately you spend on a startup that's purposeful to go address the pain point that they came to.

Zac Darnell: I'm curious really quick, how often are some of those early employees of the new venture, existing employees from big co or are they net new entrepreneurs that you're finding that maybe have some experience in the vertical?

Ryan Larcom: Yeah. And a little bit of both. We find that really great entrepreneurs love to be involved at the earliest stage possible because if we make too many decisions without them, it's just no fun. Great entrepreneurs are scrappy, love rolling up their sleeves, love making decisions early. The earliest folks who are involved to your point are the corporation, and we work early to find entrepreneurial talent inside of that organization, as well as subject matter experts who know the space really well. What we've generally found is that really great leadership teams consists of a couple of different personas. One of those personas is often the CEO, but that individual is great at fundraising, great at scaling a venture-backed software startup, and those talent rarely exists in big cos. Sometimes they do, but rarely. And so we're often bringing that type of an entrepreneur in from the outside. However, there's another class of folks who are either builders or customer-focused people. And those two personas could exist inside the corporations. Folks who either know the customer, their pain points and their ability to either sell or support those folks really well or who know how to build a product rapidly in a venture growth model with an agile framework, to be able to grow and scale alongside customers. And sometimes those come from the corporation and sometimes those come from outside entrepreneurs as well.

Zac Darnell: Do you find that some of these customers that you're working with are digitally native or oftentimes this is their first digital product? They have no idea what they're doing there in that space.

Ryan Larcom: We worked totally across the spectrum. We've worked with traditional industrials who've recently launched digital arms, and we've worked with some of the best most progressive firms out there who have their own internal studios and CDCs and build their arms as well. So totally across the spectrum, which is, it's really fascinating to watch the whole arc of how the industry is developing.

Zac Darnell: I bet. And I'd be curious, if you've working with somebody that maybe has more knowledge and experience with the way that you typically work versus a client that is like, " Hey, show me the way, be my Miyagi." I would imagine in one way, working with somebody that understands or has a lot of experience is more challenging because there's probably more opinions there. No, no real question there, just an observation.

Ryan Larcom: I think really great corporate partners though do bring a couple of things to the table. And I think part of it is making sure that we've got kind of the peanut butter and chocolate that fit together and tastes real good when you put them together. Great corporate partners are able to bring their subject matter expertise. They can reach deep into the business and understand the problem, their customers, so that we can reach through them to better understand the real pain points and value props on the other side, and their capital and talent. So really it's ideas, talent, and capital. And if the corporation can bring those through, which takes a lot of work and a context from a big co to be able to get those, we can do the business design, we can do the launching, we can do the entrepreneurial building side of things.

Chris Shinkle: Brian, what kind of advice you might give to some of our customers or people who approach us? And I didn't coin this term, but I've been using it a lot lately, talking about the messy middle is this spot between, the business has an idea. We think there's this opportunity that exists, and I have teams that are ready to go execute. And how do I go from these spreadsheets and PowerPoint presentations to actionable backlog or work items that we can build and deploy? How do I navigate that messy middle? I'm curious from your experience, what advice you might give or what you've learned over the years about some of those challenges of navigating that space.

Ryan Larcom: I heard a quote recently, and gosh, I wish I was able to attribute. It was an Amazon or one of the other successful tech cos, which was, if you want something to fail, make it somebody's part-time job. I think too often, corporations shelve these innovation things in the corner and say, "Hey, let's just push that forward, make it a launch project." And then in the same breath, turn around and look at us and say, "Make sure that you're not a drag on the business." The worst thing you can do is put these things on somebody's plate as a part-time job. That is the ultimate drag on the business. First of all, I think having these explicitly spun out in an area of the business where we are going to process through those ideas rapidly, and then pairing that with a process, ideally with learning milestones involved. When we think about learning milestones just from idea to conviction, we're thinking about, have we identified the problem really well? Is it a big opportunity space from a market perspective, but more importantly, do we know who the customer is and what their priority job would be done? And do we have that with a large amount of research from one- on- one interviews through ethnography, as well as some research and surveys? When you understand the problem really well, then you can move to solutioning. From a solution perspective, do we understand the MVP? Not the big solution. Everybody wants to paint where the magic bullet is. What's the first product that's going to create value out of the gates that people are going to love and use and beg for you not to take away? And then when you know what the MVP is, how are you going to monetize that? Inside corporations, you've got tons of options. It could be a loss leader. It could be product that drives stickiness for customers. It doesn't necessarily have to be profitable, but there needs to be a clear understanding of what the unit of value is that's being contributed to the customer so that you can monetize that unit of value in a meaningful way, whether it's per head, per platform, per transaction, per seat, whatever so you'd be really clear on those things. And when you get those three clicks done, then you can look at it more clear eyed and say, " Where's the best place to build this business?"

Chris Shinkle: That's fantastic. I just need to send this link to like four or five of our clients we're working with. I think they struggle, like you said, making it a part time job. They struggle with how they think about funding these and oftentimes the funding part of the organization or the culture influence how they think about moving forward. Sort of learning versus building to learn versus building to earn, people build to earn. They don't know how to do the learn part, what you just described there in terms of problem, solutioning, MVP, understanding unit value and monetizing it. I just think tons of people struggle with that.

Ryan Larcom: I'm sorry. If it failed Chris at any stage along the way, there are assets then that go inside the corporation. If you have a refined version of a customer persona, that's something that they can take back and say, " Hey, we spent two months and$ 25,000 learning, who's the persona now that you can take to the marketing department, who can sell our core products to you better?" This isn't a great startup idea though, and to your point, better understanding what the learning milestones are rather than to your point, the earning milestones. These businesses aren't interesting to big cos for five to seven years before they clear the 10, 50, 100 million dollar mark.

Chris Shinkle: Right. You made an interesting point there. I'm curious how much when you're brought into a corporation and you're trying to do this and move it outside and set up this sort of startup, do people inside feel like marketing say, " Well, that's our job." Or sales is like, " That's where we can..." feel like they're getting cut out or losing some control. How often does that happen, and how do you navigate that?

Ryan Larcom: It's a good question. And again, this comes back to, what do you need to scale this company? If scale is the problem, you know what the opportunity is, you know how to access those customers, then the scaled efficient resources of the corporation ought to be brought to bear. Keep it close to the company. That is sales job. That is marketing's job. They have the ability to do those things. If however, it's so far adjacent that it's a new set of customers that sales has never reached before or it's two steps away down the value chain, well, yeah, sales could be capable to doing that, but they actually don't have the business autonomy to go and do that. They will always be pulled back to serving their initial customers. And so it's better to be out. The thing number three, we talked about mistakes. Mistake number three is to confuse the idea of a heavyweight versus a lightweight team. Heavyweight teams are purpose- built. They sit in a specific organization. They have one of each person in a function and they report to one CEO. They're not matrixed organizations. And so when you want to learn, building a heavyweight team is an important thing. You stick them in a corner and you let them go figure it out completely without the boundaries of process and learnings from the big co. If those things were useful, you don't need to have the weight team. You stick it in the business, you create a matrix lightweight team to go solve those problems, but more likely they don't know. And so they have to go sell externally to brand new customers, brand new technology. You'd do better to stick those people in a corner and let them go without all of the weights, if you will, of process and rigor and that sort of thing that's inherited.

Chris Shinkle: Just switching gears, and I didn't ask you a question because I want to get it in before we run out of time. Selfishly, I like to ask this of people, but tell me something that in the last year or two years, book or something that you've read that's been particularly meaningful or you would recommend.

Ryan Larcom: This may be one of those that's not going to fit in the podcast. Well, because I've got a weird perspective on reading books, I think the learning economy is amazing. And honestly, I think the best thing you can do is get a book dollar per value learned 30 bucks, right? You learn a brand new thing, incredibly useful. I have learned a ton more from experience these days than I've ever learned from books. And so I've actually not been reading books at all. I have been reading long form, medium posts. I think there's some amazing folks out there who were thinking about corporate innovation that I've been following along with. And so maybe that's more of it. I think some of the most influential books to our area are Eric Ries's Lean Startup. There's another book on corporate innovation that got published recently by a startup studio, which is about creating a funnel from one end of an idea to the other end of the business that I think is really good tactically. I forget the author's name. I can send it to you afterwards, but yeah, I've been following along with really great venture builders and folks who are triangulating these problems from a couple of different directions more than I've actually been reading at time. Maybe some other folks in my team are good at that though.

Chris Shinkle: No, I appreciate that insight.

Zac Darnell: I like finding new people to follow. I don't know, for some reason during this pandemic, I have been afforded less reading time. I normally try to read about a book or two a month and having more article based or web followings has been much easier to consume. I don't know what it is. To pick it a little tactically right now, I'm curious, I was going to ask about, are there specific verticals that you tend to see more opportunities within, or is it more, here's a set of markers across all industries that tends to line up with great opportunities. It sounds like it's more the former. Really any industry can be disrupted with something new with tangential innovation. Are there the five questions that you ask a big co to try to identify if they're, " Man, yes. Okay, the next 10 years there's going to be this really cool bleeding edge opportunity here. Let's go tackle that." Are there specific markers within that?

Ryan Larcom: I think where we see the most innovation occurring right now is on the financial and insurance side. But I think that actually has more to do with the current state of the economy. When the economy tanked although there was a ton of access to free capital prior to that, free capital spilled the light, those two sectors though kept that. They had a ton of cash available to them and they were looking for new ways to invest in it. And so as a result, we've seen a pretty big FinTech InsureTech boom occurring out there. But to your point, the other side of the pandemic has caused massive disruptions in the adoption of new distribution models, new supply chain models, new consumer purchasing models, that I'm certain is going to create a whole another wave of opportunity inside of. But with respect to, where I think all industries are being disrupted and by and large, I think most traditional businesses are so far behind in their ability to iterate on their business model that there's opportunity everywhere. So I think what we're looking for is, are corporations ready, so to speak, to be able to embrace that and really move forward, because they've got executive willingness, a specific set of funds, they've set aside to go about doing this, the right people in governance to be able to execute. And that's a really good marker for what success looks like.

Zac Darnell: That's a really good point. I hadn't really thought about it at that macro view that really the state of the world, anything's up for grabs right now. Sticking with the tactical line of thinking, do you have a specific toolbox, I walk in with this canvas, this framework, this system? When you typically walk in with this kind of stuff again, not sharing secret sauce here, I'm just curious if you've got kind of a common tool bag that you go to. I feel like everybody I talk to has, I'm a jobs to be done guy, I'm a business model Inc guy. I'm a whatever. Do you have one of those?

Ryan Larcom: We do. Well, I think most consultancies tend to think about the idea of trademarking a framework as the way in which they differentiate. We like to think about ourselves as being successful when we launch a new startup. There's so many opportunities for innovation out there and corporations by and large are reaching for the ones that look shiny and pretty, but ultimately result in PowerPoints that hold doors open. And that kind of innovation theater is really what I believe is holding them back. So yes, yes we do. But it's a messy process to get there as what I'd say. We've mashed up the best of a whole bunch of worlds. But what great looks like and what we're ultimately architecting for is an investible business. And so when you think about what makes for an investible business at a pre- seed stage where it's literally just an idea, when we talked about the problem, and we are jobs to be done folks. That comes from our inner psych heritage.

Zac Darnell: I'm not knocking it, trust me.

Ryan Larcom: A good revenue model. How do you get a 100K in ARR immediately, as well as a good understanding of the long- term value of the market? And then a purpose- built team at the early stage, the people that you have involved and their ability to grow and scale up team while searching for a problem in a business market is really the best asset that you can contribute right out of the game. So team idea capital is really what we're architecting for.

Zac Darnell: I feel like that's very on brand for us too. We don't have some secret set of, here's the tool set and the framework that we've created. We really have a toolbox and we learn from other people in the industry and read a lot of books and articles and try to find what works best given the set of circumstances that are constraints within the people, the organization, the problem that we're tackling. And I feel like that's the most successful piece because if your framework is the thing that you're selling or offering, I feel like it's kind of limiting when you're really looking at the outcomes, which is what I feel like you're hitting at there, Ryan, as the outcome of, we're looking at the successful financial viability of this business, not the fact that we ran some awesome workshop, which is what I feel like that's what I'm hearing from you and I love that.

Ryan Larcom: Agree. And of course, I think perhaps what we've got in common too is underpinned by a modern understanding of how software companies are building ground. You guys build on agile, you're probably using the most progressive types of front end dev. We use common sets of coding languages and tech stack. Those things almost go unsaid, so to speak, and yet really you can't take it for granted. We've met a lot of corporations who were teaching what basic product management looks like.

Chris Shinkle: Oh, we see time and time again going into corporations where it's marketing, partnering with IT and there's a lack of true product thinking, especially modern product thinking I would say in a digital mindset world, a lot of these companies are traditionally building physical products and goods, and they're trying to think about, okay, now, how do I monetize something in this digital space? We've been doing this stuff and giving it away, but there's got to be a way to monetize this or shift to an adjacent sort of market. And they just lacked some of that, you said modern product. They're still trying to learn and grow in the area of just how to think about products today.

Ryan Larcom: And again, that's another case for why out is a great case. You can hire in the talent to augment those capabilities and learn and grow. I think that the mistake that I see a lot of corporations making is they think about education almost as the primary job to be done, not the secondary job. They're like, well, we want our whole workforce to be innovative, teach us to be innovative guys. And yes, eventually over time as you transform your business model, the organization will be innovative. But actually for now in order for this little company to exist in the world and be successful, tactically, the only people that need to be innovative are the bodies in that room and the board that oversees them. And it takes long enough just to transform the hearts and minds of the board, let alone the internal stakeholders. And then over time, the change in mindset does agree to the greater business. But I think when you start with educate my entire workforce first, get us all up to date on agile and product management by way of doing some innovation work with us, man that's a tall order. And I think it's the wrong order to think about it. You're thinking about it at scale, instead of starting with MVP and scaling.

Chris Shinkle: I'm curious, Ryan, in your experience, a lot of the companies you work with, where they are. I feel like high Alpha has just played such a huge role in the tech scene within the Indianapolis area and Indiana and Midwest. I don't know if a lot of the opportunities that you find are in this area or this region of the country, or is it just really all over your perspective of how Indianapolis has grown and changed in the last five years.

Ryan Larcom: Oh gosh, those are three totally great questions all rolled into one. First, yeah, High Alpha loves Indianapolis, has benefited massively from the tech community that supported exact target and then High Alpha over time and then all of our portfolio companies. So we continue to be incredibly bullish on the future of Indianapolis as a tech community and on the talent and the companies that can get built here. We have experimented increasingly with launching companies elsewhere. And I think what's really interesting is our experience in building capital efficient businesses here in the Midwest has led us to look at other tier two cities as they're being referred to, but not New York, Boston and San Francisco with respect to where venture capitals go in, because there's a huge opportunity in those overlooked markets where talent is just as well distributed and opportunity is as well, but funding is not. And so we've been building a lot of businesses in those areas. With respect to where High Alpha innovation has been investing, we've got folks that we're working with on both coasts and in the Midwest and increasingly internationally, which is exciting. And I think there is a huge opportunity across the world for innovation at this type of level to be occurring. And I think honestly, COVID's really pushed that forward. The ability to have interactions like we're having today digitally to not have to be in the room to shape thinking and to launch teams that are actually fully remote and distributed rather than just remote in a different city is changing the way that we're thinking about what it means to be launching brand new companies along the way. So a lot of new thought there. We're not really yet sure what does the future look like for tech. Is every company a fully distributed workforce? And we're beginning to see that happen, but I think there is there are certainly some very special things to the ability to walk up and down the stairs and partner with your companies who are in the same room and to be able to do it inside of really important community environments where you've got assets like corporate partners, customers, accelerators, funding sources that all sit in one specific area. So continue to be really bullish on the future of Indianapolis specifically because I think we've been doing a lot of things here as a community that will make tech thrive.

Chris Shinkle: I'm going to ask you to read your crystal ball here for a minute because it's funny you say tier two. My wife was in hospitality for a number of years and educated me on what a tier two city means. Do you think Indy will ever become a tier one tech market? Do you think we're ever going to be seen in the same breath as Silicon Valley, hopefully the positive side of Silicon Valley, Raleigh, some of the larger markets that are more publicly well- known or do you think we're always going to be seen as just, " Oh, you're a Midwest town that have some tech companies?"

Ryan Larcom: Well, a couple things to think about there. First is, I think the Midwest is completely overlooked as an opportunity source, not just for great talent and opportunities, but some of the areas that we've been partnering with our corporate partners on here are areas that because they're so nuanced to what industrial companies have been facing, just aren't even noticed out on the coast. The opportunity to think about how you change order management from fax to digital, the way that trucking and goods are moved from place to place and all of which has done on paper. And these are problems that San Francisco which lives decades in the future with drone delivery models just doesn't even notice. And so as a result, funding is just not going there. Huge overlooked opportunities in trillion dollar markets. And so you hear Andreessen Horowitz talking about the idea of building and response to these types of opportunities and seeking the next trillion dollar markets, supply chain is one of them and men. We definitely know supply chain out here in the Midwest and if our corporate partners can be as progressive as they need to be to disrupt themselves, I think they've got a better shot at transforming the industry than those on the coast do, but that's a big it. And that's one of the bets that we're making is that we can help the incumbents move faster than the disruptors can go. I think that's a piece of why we're betting on the Midwest. With respect to how folks see us, I think that's a totally different question entirely. Venture capitalists for better or worse invest in what they know. And as a result, the networks and the hierarchy will exist in as much as venture capitals continue to believe that those types of hubs are the defective places where innovation can occur. We're hoping to disrupt that model.

Zac Darnell: That's really cool. I'm excited about where the Indy market is going. I've been doing this not as long as you two but for a little while now and I absolutely love Indy. I've had a number of people that have lived here and left to go work in San Francisco and that's fine. I'm not going anywhere. I love it here, and so I hope we continue to grow and just build an awesome community more than anything. Ryan, thank you so much for joining us. This has been a really, really fun conversation for me. I love hearing about all the stuff that you guys have going on. I hope we get to talk again in the future. So thank you so much for joining us.

Ryan Larcom: Thanks for having me on. It's been a ton of fun sharing about what we do and hearing about what you all are doing as well. Having SEP here in greater Indianapolis is just great for pushing forward tech and the opportunities for founders to be able to bring their products to market.

Zac Darnell: I'm Zac Darnell and This is Behind the Product, an original podcast by SEP. You can find more about us at sep. com/ podcast, and subscribe wherever you get your shows. Thank you so much for listening. See you next time.