Arkansas Inc Podcast - Fostering Entrepreneurship in Arkansas: a 2-Way Podcast with AEDC & Startup JunkieFebruary 14, 2019
In this episode of the Arkansas Inc. Podcast, we present two podcasts in one, recording alongside the Startup Junkies podcast. Host Jeff Moore explores innovation and the entrepreneurial ecosystem with Dr. Jeff Standridge from The Conductor, Michael Iseman from Startup Junkie, and AEDC's Clark Cogbill.
Don't miss your chance to get a free copy of Dr. Standridge's book, The Innovator's Field Guide.
What Does the Arkansas Economic Development Commission Do?
Speaker 1: Welcome to the Arkansas Inc. podcast, where we discuss the latest topics and trends in economic development with subject matter experts and influencers from across the nation and around the world.
Michael Iseman: And we are live for another episode of The Startup Junkie podcast. This is Michael Iseman, and we left Jeff Amerine at home, but we have two Jeffs with us today. We have Jeff Standridge and Jeff Moore, and also Clark Cogbill. So we are here at the Arkansas Economic Development Commission, and we're going to be talking about the AEDC, and then also some of the programs that we work with the AEDC on at Startup Junkie. This is going to be a simul-podcast. We're not sure if this has ever been done before, but I think it's all going to work out. This is going to be going out on the Arkansas Inc. podcast and the Startup Junkie podcast.
Michael Iseman: We'll start by talking about the AEDC learning more about all of the different programs that you work on, and then turn the corner and talk about the programs that Conductor and Startup Junkie have worked on with you too. Maybe even do a book signing before it's all over with, Jeff.
Jeff Standridge: I think we decided that this was the very first simul-podcast in this history of the world.
Michael Iseman: We decided, which means it's true.
Clark Cogbill: And there is some level of concern that we may break the internet.
Michael Iseman: Or create a crack in the space-time continuum and be sucked out into a...But we're risk takers, right?
Michael Iseman: So, Jeff Moore, can you start by sharing a little bit about your role here at the AEDC and then also, a lot of people's perception of the AEDC is maybe that you're creating jobs in Arkansas by recruiting companies and employers in from elsewhere, but there's a lot more the AEDC does, so could you just start by talking about your role here and also what the AEDC does?
Jeff Moore: Certainly. And it's great to be here. Really, crazy rainy day but just a great day to be here in the state of Arkansas. So I work here at the Arkansas Economic Development Commission as the Executive Vice President of Marketing Communications. So predominantly my job is to tell the story of what we're doing in the state. So I think Michael, when you ask that question, I mean you probably ask any of those on the executive team the question and they would give you the same rote or statement on the web or what we write on the wall here in terms of mission, but our official mission is to create economic opportunity and attract higher paying jobs and expand and diversify state and local economies.
Jeff Moore: And that includes income and investment. Domestic investment, and then foreign direct investment, as well by recruiting companies from outside the United States to our state. But I think more importantly, sometimes that can get lost, this idea of recruitment, that it is all about getting businesses into the state. When in truth, majority, 80% or better of our announcements and our projects each year are actually expanding businesses within the state. And so we do a great deal of work just to facilitate and nurture and help and grow. And yes that involves funding and incentives, but it also involves a lot of ancillary programs and divisions within the Arkansas Economic Development Commission or AEDC as it's referred to by acronym. And that includes science and technology, which, Jeff Standridge sits on the board for science and technology. That involves rural services and what we do for our rural communities, that involves existing business resource division and some ways that we're helping businesses to grow and become more efficient so that they can expand and add jobs, but also higher paying jobs.
Jeff Standridge: Jeff, let me interrupt if I can. Some people may not know, you also have some actual consultants on staff here at the AEDC who work with, whether it is manufacturing companies or family-owned companies or what have you, and small and medium businesses, to actually bring programs into those companies to help them figure out how to be more efficient, more effective, more successful.
Jeff Moore: Yeah, manufacturing solutions is a really good example. That was one of the recent efficiencies that the governor moved some bits and pieces around, quote-unquote "agencies into other agencies," and consolidated before his more recent overhaul that's more transformative in a mass way, but one of those was manufacturing solutions which was Arkansas Manufacturing Solutions. And they worked directly with industry in the state through Six Sigma, Lean; they do a lot of work with Kata. Toyota Kata has been a really big program that they've found a lot of success with. Businesses are finding ways to become more efficient, and that allows those businesses to expand and grow.
Jeff Moore: So, when you think about economic development, a lot of times they call it BR&E- business retention and expansion and if you add recruitment on there it's like BRER. Government's always trying to come up with an acronym. But the really big part of that, the BR&E, is business retention and expansion. And the recruitment is also a big part of that, working with consultants and influencers that are helping businesses to decide how to consolidate and move business into the state.
Clark Cogbill: And one other division I think we should mention as part of AEDC is the Minority and Women-Owned Enterprise Division. Which has recently expanded its title to include women-owned businesses, which is important.
The Importance of Entrepreneurs
Jeff Standridge: Fantastic. So talk a little bit about how you support entrepreneurs. We'll transition into maybe talk in that regard.
Jeff Moore: Well, when you begin to think about your existing business and expanding and helping your existing businesses now, a big part of that, is entrepreneurial activities, start-ups, people with ideas, disruptive technologies, and commercialization and tech transfer, and you have all of these things going on within the state. And I think, like most states, Arkansas realizes this is a big part of what we're doing, not just the startup community and not just entrepreneurial early stage startups, but also the talent that's involved with that and the ability to share talent. Because tech and all of the jobs that these kind of startup communities create is so relevant to industry as a whole.
Michael Iseman: Yeah. And the way we look at it with Startup Junkie is kind of a new form of economic development, a new branch of economic development where instead of BR&E, instead of retention and expansion, you can create that environment where new startups can grow and create new jobs, create new tax revenue, create kind of an ecosystem around it then it's more sustainable for a region.
Jeff Moore: So now it's BRERC. Business expansion relocation and creation.
Jeff Standridge: I was about to say that it sounded French. We could get [Marcial Trujo 00:06:08] to come help us pronounce that.
Jeff Moore: Jeff Standridge, you're very much involved on the committee level on some of these entrepreneurial programs, could you share some of the different incentives and programs that the AEDC has for entrepreneurs in Arkansas?
Jeff Standridge: Sure. Jeff mentioned a few moments ago with some of the consolidations, and one of the consolidations that occurred was ASTA, the Arkansas Science and Technology Authority, was integrated into the AEDC and that board became the board of science and technology, which I have the privilege of service as vice chair of that board with a number of great folks. So they, well I guess I should say, administer a number of science and technology programs to stimulate new technology. So there are a couple of grant programs, one we call the TTAG which is about technology transfer, and it's a matching grant program that can almost serve as a phase zero to an SBIR grant, Small Business Innovation Research Grant. We also have what we call the technology development program, which is kind of a validation grant to help technology get ready for commercialization, and that can be up to $100,000 in terms of the fund there.
Jeff Standridge: A number of other more investment-type programs where they're royalty based, whether it's seed capital investment program, tax credits for research and development, where all of the cost of a technology company that's doing a lot of R&D, they can actually get 33.3% tax credits on that R&D cost. We have some in-house tax credits that we do ourselves. We also have a matching grant program for the SBIR, so if someone's gotten a phase one SBIR or a phase two SBIR, that shows us that there has been some validation of their technology at the federal level and we want to be able to support those types of technologies and retain them in the state of Arkansas, so we have a matching grant program that we look at. And about every month when we meet, we have one or two of either the technology development program applications or perhaps an SBIR grant.
Jeff Standridge: One of the things, of course, wearing my other hat which I share with you Michael, is the accelerator grant program. And there's up to $250,000 for accelerator programs, which we'll talk about a little bit later. What we do with the 10x you do with fuel what the FinTech health innovator and those folks do. And I had the opportunity to tell Governor Hutchinson just this past week about some of the impacts that we're having with some of that grant funding, so it's really, really cool.
Jeff Standridge: One other thing that I think I should mention as well is there's also the equity investment tax credits. And so, for companies that are raising money and seeking investors, there's an opportunity to apply for a pool of funding that's administered in the form of state tax credits, and primarily as an investor, those are very, very appealing. When I know that if my fund's going to put $100,000 into a company in Arkansas, that's raising capital and I know that my fund is going to get a 33.3% tax credit back on that that we can either sell at a slight discount, or we can distribute back to our investors, that's a huge enticement if you will, for a lot of these companies that are raising money.
Jeff Moore: Yeah, I think one company that really comes to mind is Apptegy, who's utilized the ITC and been really effective in helping to do just what Jeff kind of mentioned there. The proof's in the pudding.
Jeff Standridge: Yeah, they've realized some great success with the ITC.
Michael Iseman: Jeff Amerine talked about that program a number of times and would say it doesn't make a bad deal good, because it would still be a 66% loss if it was a bad deal. But it makes a good deal pretty great; thirty-three percent return right away.
Jeff Standridge: Absolutely. And all of the investors have the responsibility of doing the due diligence and looking at the deals, and I think we're in a unique role because we get to see a lot of those deals before they become deal flow as entrepreneurial support organizations. But if you've got a good deal, it can make a good deal fantastic.
Jeff Moore: And I think that's pervasive outside of just the entrepreneurship and innovation in the state, in these startups, but I think that's pervasive of our agency and especially from Mike Preston on down is that that's the mentality. Sometimes incentives are seen in various and sundry places you'll see critique about whether they be statutory or discretionary incentives, but the mindset and the motive here is exactly what you said, Micheal. It can't make a bad deal good, but it can make a good deal great.
Jeff Standridge: Well, and as we sit kind of on the process for this board science and technology is we also have a commercialization committee that actually reviews all of these applications and makes recommendations back to the board. But we're constantly challenging each other; the committee is. Is this going to create jobs in the state of Arkansas? Is this going to create tax revenues for the state of Arkansas? So, as an investor, I now know, and I didn't know this before sitting on the board of science and technology, but as an investor as well and a fund manager, I know that if the State of Arkansas has awarded a technology development program grant or if it has awarded equity investment tax credits, there's been some degree of review and validation of the technology or of the business model or what have you. If they go on to get an SBIR, then there's been an additional degree of validation. So part of determining whether a deal is good or not is the due diligence, and those things play into.
Jeff Moore: Cost-benefit analysis, yeah. Most certainly. Just to back up a little bit, I think part of the role that we play in the state, you guys are really involved and down in the weeds and you're also at a higher level as well. But as a state, as we promote entrepreneurial activity in the State and startups, I think it stems out of our strategy, and I can validate it and show you just here, you can't see this in the podcast, but goal one is business formation. So that's a big part of what we do because of some of the things we've talked about.
Jeff Moore: But from my perspective, marketing, and communications, my goal is to tell the Arkansas story. And so we're telling all of these stories, whether they be about competitiveness and site readiness, whether they be about workforce and talent, the ability to provide adequate talent and pipeline of talent. But to tell the story about what we're doing in the State involves a lot of things that you guys do on a daily basis. We kind of feel ourselves to be kind of a conduit. We're a conduit to tell the story of what's going on in the State. And we're kind of talking a lot about grants, and so that ends up being one part.
Jeff Moore: I have four pillars that I think about as we try to tell the story of entrepreneurship and innovation and that is support and accessibility which you guys are very much involved in, and how readily available it is to find support and the help you need, the mentorship. The cost of doing business is the second pillar of what makes our state very advantageous for early-stage business growth, and also the talent available. We've kind of mentioned that in passing a little bit and how the talent is so transferable and easily found in our state. And then finally what we've been talking about here a lot is grants and incentives. And so those are kind of the four things that I try to do from an AEDC standpoint for the state and for what you guys are doing on the ground to tell the story.
Michael Iseman: Well, before we turn the corner and talk about some of those programs we're doing on the ground, do you have any stories or anything that the AEDC's been a part of, whether it's small business or large business, that's just like a rallying cry story that you like to tell about the AEDC and the role in the business community here? Or something that might shock people? Any stories that you really like to tell about the AEDC and the work. I know I didn't prepare you for this one, but if there's any awesome stories that you'd like to share I'd love to hear them.
Clark Cogbill: Well, this is Clark. It's so great, a couple of examples come to mind, or one example, and that is Conifex, the Canadian timber company, expanded here last year and now occupy a sawmill that was previously just abandoned. And some of the same people who were laid off years before are coming back to work. And so, Canada has had some trouble with their timber crop due to bug infestation and other things, and they're looking to the Southeastern United States, and so we're right in the heart of the wood basket. But what was so great about that, was that some of the people who had lost their jobs years before were able to come back to work.
Jeff Standridge: That's awesome. Clark, we didn't really talk about your role with the AEDC, why don't you tell us a little bit about that.
Clark Cogbill: Sure. So I'm part of Jeff Moore's team, I'm Director of Digital Marketing here at AEDC. My strategy is the same that Jeff mentioned. I'm just a part of that strategy to tell the Arkansas story. We want to do that through digital channels: through our website, through social media, through digital media. And really, what we try to do, and I love my job, is create content, such as this podcast. Or a new food and beverage report that we're working on. Infographics. We have a person on our team, Yong Luo-Branch, who has a Ph.D. in GIS and mapping. She's part of the marketing team. She's creating maps that show all kinds of things all over the state. Anything you want to know, whether it be infrastructure, institutions of higher learning, an interactive map where you can layer things on such as interstates and navigable waterways, employment.
Clark Cogbill: And so we're creating content, our key is, let's create content that is valuable to our audience. We don't want to talk to ourselves, we want to create content that is helpful for a site selection consultant or for an executive who is looking for that next expansion. Whether it be that they're already in the state and they're evaluating expanding again in the state or expanding to the state. So we're trying to add value and position ourselves as subject matter experts on the things where we really are, like timber, food and beverage, tech and startup, aerospace and defense, and things like that. We tell that story through digital channels, and target, if we know who we are talking to and we feel like we have the right message, we think we can get that in front of them.
Jeff Moore: Yeah, the coolest thing I think was about to witness in my third, so I'm going into my fourth year now, is we try every year to travel with the governor to New York and visit all the media outlets. We visit Fox News and CNBC and go around and just let the governor talk about what we're doing from an economic development standpoint in the state. And the first time was extremely fun just to watch the looks on people's faces, but it's always interesting to see how people come to reevaluate or sort of understand where we are as a state or what we're doing from a technological standpoint especially in light of what you guys do on a daily basis with entrepreneurialism startup communities and such.
Jeff Moore: But I think the thing the governor's done that's been the most impressive to me has been the coding initiative in the State and mandating coding in every public school. And funding it, which no other state is doing. And Wired magazine I think the headline was 'So Arkansas is Leading the Learn to Code Movement.' And so people begin to ask this, and the governor begins to talk about the entrepreneurial ecosystems and these areas and the tech talent and the kids who are now having a chance to not just take one class, but now the numbers are going up and kids taking subsequent two classes. The number of women and minorities involved who are taking those classes.
Jeff Moore: So to see them begin to ask questions and light up and begin to understand how powerful this state is and how forward and progressive that we are in that respect, has been awesome to watch.
Jeff Standridge: You know, looking at your third goal in workforce that really resonates with me. We talk about the things that we're involved in on a regular basis and we try to make a difference in the ecosystem and talent is one of those. And I'll be honest; when I first started working in the ecosystem, I didn't think about it being a talent development initiative. But let's be real about it, even established companies want to hire innovative entrepreneurial talent. So the sooner we can begin engaging with students to teach them the disciplines of innovation, which are transferable by the way, from just about any discipline to another, and we introduce them to coding in the primary schools. We introduce them to innovation and the skills and disciplines of innovation in middle school, junior high, maker spaces, those kinds of things, creativity. And then we bring them into entrepreneurship as they approach the junior high and senior high levels. That's all part of a talent development initiative, and I think we're very, very fortunate as a state to have a governor who gets it and he gets it.
Michael Iseman: You've been listening to the Arkansas Inc. Podcast. We're going to take a short break, and then we'll be right back.
Michael Iseman: Well shall we turn the corner?
Jeff Moore: Alright, now we're to the government part. Hello, my name is Jeff Moore.
Jeff Standridge: And I'm here to help.
Clark Cogbill: And for our listeners' benefit, maybe we should get a little introduction of
Jeff Standridge and Michael Iseman, so Jeff tell us who you are and your role at the Conductor.
Jeff Standridge: Sure it all started in a small town in South Arkansas when I was born next to my mother. I'm kidding, that was a little joke — a few years in health care, and then a long history with Acxiom Corporation and working internationally. Left two years ago and started working with the Conductor, founder of a venture fund called Cadron Creek Capital, and now we're moving into the newer fund called Cadron Capital Partners. So I work as what we call the Chief Catalyst, and I spend the vast majority of my time with the Conductor doing one on one coaching, consulting, mentoring, what have you. And we'll talk a little more about it, but the Conductor is a public-private partnership between the University of Central Arkansas and Startup Junkie Consulting so I'm very very proud to be a part of that organization.
Michael Iseman: And I am the Chief Relationship Officer at Startup Junkie. We do a lot of similar things that the Conductor does. I came into this role by actually, my first internship was with the ARK Challenge, which was the first accelerator in the State of Arkansas. And Jeannette Balleza Collins was the director of that and Jeff Amerine was the leader of that and he hired me for this internship and then at the end of it, he's like, you know this is junior year of college, he just told me, 'if you've got room in your schedule next semester, take my new venture development class.'
Michael Iseman: And so I took his class, got to know him pretty well, ended up starting a business out of that called BioBotic Systems where we license a patent from UAMS and worked with a team to write the business plan for it and created a business out of that. And got to know Jeff pretty well, really caught the entrepreneurship bug with him and in that class, and then I worked at Cerner up in Kansas City for a year which is the largest employer in Kansas City and didn't really have all of those employment attributes that I loved in working with the entrepreneurial community. And so after a year to the day up there, I came back and started working with Jeff and the Startup Junkie team, and I've been there for about three and a half years now. We'll talk about some of the different aspects we do, I really love the creating culture of entrepreneurship, and a lot of the different events and programs that we do are what I spend a lot of my time on. And then someone on one consulting with entrepreneurs and then, obviously, enjoy talking with people here on the podcast.
Jeff Moore: Before we get into the meaty questions, I mean, I'm just interested in hearing your stories, and we'll ask some of these questions a little later toward the end of our little session here, but would you say that the primary catalyst for you becoming involved in this community was exposure? Like you mentioned you were exposed to Jeff, you know I'm sure Jeff, you know you were exposed to...
Jeff Standridge: Yeah. When I really started getting involved, I was chair of the Conway Chamber in 2013 and knew that about halfway through I was going to get put out to pasture, which is what they do with former chamber chairs. It's a joke, and I hope Brad Lacy's not listening because he would take issue with that, but anyways. And so I started asking the question. We have three institutions of higher education in Conway, a highly educated workforce, two thousand Acxiom employees at that time, fourteen hundred Hewlett Packard employees, why aren't we spinning out startups to a proportion that would compare with other larger cities that had the same attributes? And really couldn't find an answer to that.
Jeff Standridge: So we just put together a team of folks and spent seven or eight months just talking to the Jeff Amerines of the world, the Ted and Mikes over at Innovate Arkansas, the Christian Andersons and the [Ridgehals 00:21:49] of Inuvo and the Charles Morgans and we really found out what most other people had found out in building entrepreneurial linkage systems is that you need talent. We've talked about that. You need access to guidance and expertise because we know that most startup companies fail because of very preventable reasons. But they don't have the money to hire an expert to help them prevent those things. Access to an ecosystem where they can come together and share ideas and share resources and learn and develop. And then finally access to capital. And we didn't really have any of those things.
Jeff Standridge: So we started Cadron Creek Capital out of that team and then brokered a relationship, if you will, between Tom Courtway and Jeff Amerine, Tom Courtway was then President of UCA, to begin looking at how do we take at that time the seven years of history that they had in Northwest Arkansas and the seven years of success and how could we effectively port and adapt that to Conway, which ultimately became the Conductor. But yeah, it was exposure to the ecosystem that, if you had asked me in 2013 by November of 2016 will you leave a 20-year career with Acxiom and jump into the ecosystem headfirst, I would've said you're crazy. But I've been doing that.
The Entrepreneurial Ecosystem
Jeff Moore: So Michael, for someone who doesn't know this world as well, how would you define an ecosystem? If I mentioned that word and someone says "What the heck is an ecosystem?"
Michael Iseman: This is actually, we spent some time yesterday doing some strategic planning for Startup Junkie Conductor, and one of the parking lot items is we need a better definition of entrepreneurial ecosystem. But I'll take a first stab at it.
Michael Iseman: What Jeff was saying, you know, that there's talent and we may have some different words for it, but talent capital are obviously two big drivers of an entrepreneurial ecosystem. No companies are going to move there if there's not talented people and capital because it's expensive to grow a company. And then also a culture of entrepreneurship, and then some community engagement. So that's those mentors, subject matter experts, but also the large institutions like universities and major corporations that have a lot of the power, a lot of the knowledge, a lot of the resources in a community. If they can look at those startups as kind of like outsourced innovation and work with them, and understand that working with them and building up a startup scene around them will be really additive to the talent pool as well.
Michael Iseman: Those are kind of some of the ways that we look at the ecosystem. I think the ecosystem you can think of like a rainforest; there's the really big trees, and there's also the little critters running around on the ground. It's not something where it can be singular, it's not one person that can own it or one organization that can own it. It's really the collective of all of the interactions and conversations that happen, and there's a lot of different components that need to be in play for it to be a healthy ecosystem. I think that we play on that entrepreneurial side and those four pillars that we really focus on though. And if you ask me, after we finish our parking lot items from strategic planning, I'll have a better definition.
Michael Iseman: [crosstalk 00:24:42]
Jeff Standridge: So you know, there are two aspects of it where I think Arkansas as a state, one aspect where I think we have grown considerably. And that is, let's face it, we are the size, as a state, of a large metropolitan city or a medium-to-large metropolitan city. So we don't have the density. Our density is not in a single metropolitan area; it's spread out. There's Northwest Arkansas, Northeast Arkansas, Central Arkansas et cetera. And early in the days of entrepreneurship in Arkansas, we had these pockets of activity going on. And we're starting to see a collaboration now which I think is a huge step forward in the Arkansas ecosystem.
Jeff Standridge: Where, whether it's FinTech or the Venture Center, rather the Conductor, and Startup Junkie and Health Innovator and others beginning to collaborate more and more. I think we'll look back in a few years and say 'That was a pivotal moment in the development of the Arkansas ecosystem.'
Jeff Standridge: One area where I think we have the opportunity to grow and again, we are seeing major improvements there, is in helping flagship institutions, predominantly employers, certainly universities but predominantly employers, to understand that building the entrepreneurial ecosystems is a potential talent pool for them. But as Michael said, it's also an opportunity for R&D or outsourced innovation. Rather than building an innovation and R&D team inside their organizations, they could provide some funding for a small team outside, a scrappy team that's trying to start a company or explore some technology. So I think we've got some work to do there. And we're seeing with Fuel, which we'll talk about later, they've got a lot of flagship institution. Our relationship with UCA and The Conductor is a great indicator of higher education coming into the fold. So, very excited about the next few years ahead.
Jeff Moore: Do you see that there's any of that in the FinTech accelerator and disruptive technology there in terms of what you're talking about? The scrappy little companies that are starting and creating the ability for FIS to compete on a global scale?
Jeff Standridge: Yeah. I think Wayne, Wayne Miller the new Executive Director whom we have a great relationship with and work with him on a regular basis, I think he would say absolutely. You've FIS is really looking at that FinTech accelerator and one of the reasons they've invested so heavily in time and energy and effort is because they see that as an opportunity to help develop not only talent but also technology that could give them a competitive edge.
Clark Cogbill: Jeff you did a great job explaining Conductor and the origins of it. I want to give Michael an opportunity to explain Startup Junkie, and there's two entities, so talk a little bit about those entities.
Michael Iseman: Yeah, yeah. And so Startup Junkie, if you'd like the whole ten year history we actually had our ten year anniversary, and that podcast went out two or three weeks ago.
Clark Cogbill: So tune into that one to get the history.
Michael Iseman: Yeah tune into that, and we get forty minutes of the whole history. But it started with Jeff Amerine.
Jeff Standridge: That's the one where I crashed, wasn't it?
Michael Iseman: Yeah you jumped on. But Jeff Amerine formed this ten years ago. And it was when he was basically doing the technology transfer for the University of Arkansas. And so often if there's an engineering professor at a university that develops new technology, they're probably not going to be the entrepreneur that spins out of the university and creates the company. And so he would negotiate those licenses with existing companies and startup companies to commercialize the technology coming out of the university. So that was the origin of it; when he realized, there wasn't a lot of support community for the startups or the startup scene in Northwest Arkansas. So it was Innovate Arkansas, Mike and Ted and Tom Dalton who actually started the relationship and then the Northwest Arkansas Council. So the two of them started to fund Jeff to start putting some programs together. That's when Natural State Angels Association and some others really were born out of those first initial contracts.
Michael Iseman: And the team has grown, there's been new contracts and things that we've delivered on, but over the last ten years it's been we're going to help build the entrepreneurial community. Usually, entrepreneurs are not the greatest customers because they need some support, they don't have the money to pay for consulting or support. And so if we work with large institutions who believe in this new arm of economic development, they'll fund us to do different programs from consulting, events, to build the entrepreneurial community. And through that, that's more of a non-profit activity. And so Startup Junkie foundation is the non-profit where the Walton Family Foundation is the primary funder to build a lot of the community in Northwest Arkansas.
Jeff Moore: I'm going to kind of change gears a little bit and then change again. So tell us a little bit about how Conductor and Startup Junkie are working together. Obviously what's going on in Northwest Arkansas, in Fayetteville, with that entrepreneurial ecosystem there, and now how you're working together with Jeff Standridge and Conductor and Kim down in Conway and kind of helping to I guess replicate, I don't know if that's probably the right word...
Jeff Standridge: Yeah, replicate and adapt, right? So I wouldn't say that it's cookie cutter because we're a different city, but effectively the University of Central Arkansas and the Board of Trustees in August of 2016 really liked the recommendations put forth by Jeff Amerine and his team at Startup Junkie and said 'Yeah, we want to do something like that in Conway.'
Jeff Standridge: And so they approved that in August of 2016 and then in January, and when I say approved it, they approved a funding relationship, a contractual relationship, as an initiative out of the president's office. And so we kind of report directly to the president if you will, in terms of our activities as the chief stakeholder in Conway. But it's through a contract with Startup Junkie. So Kim and Keaton and Jason and members of the Conductor team, are actually Startup Junkie employees operating as a second division if you will, operating under the Conductor brand. People ask, 'Well, why do you have a different brand? Why is it the Conductor?' And I tell them a little bit of a story.
Jeff Standridge: Number one, Conway is a train town. It was a depot, and so that's how it's had its formations. And so the Conductor is a little bit of a throwback to that. There are a couple of other things as well that I like to tell. My dad worked for the predecessor of Entergy, Arkansas Power and Light - AP&L, and I learned through interacting with him that conductors transmit energy. Well, that's what we want to do with the Conductor in Conway. I think about, I was a music major for a couple of failed years in college. When I found out that the reason I was a music major was because I worked hard, not because I was particularly talented. Different story, maybe a different podcast. But, I learned that a conductor stands in front of a symphony of very disparate voices from an oboe to a tuba and brings them together into a beautiful harmony. That's what we want to do with the Conductor and the collaboration.
Jeff Standridge: But then you think about, going back to the train analogy, when a train conductor gets on a train, and they begin moving, the literal momentum is almost unstoppable. And so, again, another thing that we want to do with the Conductor.
Clark Cogbill: So I counted three meanings behind conductor, so it really sounds like a good fit for a name.
Jeff Standridge: Yeah, exactly.
Jeff Moore: It's been well thought-out.
Jeff Standridge: It has.
Jeff Moore: You didn't just come and go "Hey, what are we going to do? I don't know. Conductor sounds pretty good."
Jeff Standridge: That's right.
Michael Iseman: I feel like Jeff is kind of like an artist, where a lot of meaning is assigned after something is complete.
Jeff Standridge: I am, completely.
Michael Iseman: What does that look like to you?
Jeff Standridge: How do we spin this? Is that what you're saying. But no, I think all of those analogies work because that's exactly what we want to do. We are Startup Junkie, we're a single team. In fact, we get on the phone every week together. We spent time Tuesday night and all day Wednesday yesterday talking about what does the future look like for our role in the Arkansas entrepreneurial ecosystem. And when I say our role, I'm talking about Kim Lane, CEO of the Conductor to Haley Allgood, Executive Director of the Startup Junkie Foundation to all of the Michael and Jeff and Brett and the whole team. How do we move this ecosystem forward?
Jeff Moore: Michael how has this worked to help accomplish the critical pieces of an entrepreneurial ecosystem that you just kind of defined in terms of talent, capital, those...
Michael Iseman: So, an ecosystem isn't something that we even, our three teams combined, can really be the ecosystem. It's more the different programs and different...I guess where we have carved out our niche, the Fuel Accelerator is one thing that is really big for both pulling in the large corporations and also building up the talent and bringing in startups from outside of Arkansas. I guess that's one of them. The talent piece would be, like, Nowhere Developers. That's something that we've partnered with SupplyPike on and put together a conference.
Clark Cogbill: Dan Sanker.
Michael Iseman: Yeah, Dank Sanker and his team. And put together a conference with over three hundred different developers coming in and learning from people from MailChimp, from Google, and then also people, technologists here from Northwest Arkansas.
Michael Iseman: I guess the capital component, Natural State Angel Association has been something that's been bringing the angel investors in Northwest Arkansas together for I think seven years now, and then also different funds like the Atomic Fund, Cadron Capital Partners, and others to kind of fill that capital gap.
Michael Iseman: There's different programs kind of in those different pieces, but it's really all back to what can we do to build talent, capital, corporate engagement, and community engagement and then create a culture of entrepreneurship.
Jeff Standridge: That's kind of the measuring stick that we use. Talent development is, as we've all mentioned here, not only a big goal of the AEDC, it's a huge goal of ours as well, collectively.
Clark Cogbill: One thing that's fascinating to me, we've referenced earlier some of the accelerators. VC FinTech Accelerator. That's a very competitive program. I think they interview hundreds of people, it's grown, they take ten each year. I called Brett Amerine one time because one of my co-workers has a son who is a student at the University of Arkansas and he has an idea for a business and an app, and that's pretty much it. And I called Brett, and I said, "Where would he go from here, do you have any advice?" And Brett's response was "Send him to us. We'll talk to him. We'll help him. We'll give him a toolkit and help him get started." And I thought "Wow, that's amazing." I mean, I don't want to speak for you but I mean it sounds like you guys are willing to help anybody, even just a person with an idea. Is that right? Can you talk a little bit about that?
Ideas and Execution
Michael Iseman: Yeah. I mean, so, to create the next hundred million dollar company, look at it just like a sales pipeline. You need a lot going in the top of the funnel. So there's a lot of ideas, a lot of potential entrepreneurs that you need to work with that aren't going to make it to that next stage where they get funding and have a product out there. And a lot of those that aren't going to make it to where it's a successful company. But you've got work with a lot of people, and those people who are going to learn the foundations of innovations and entrepreneurship that might not be that founder or CEO will go and work for those other companies that are going to build it up.
Michael Iseman: And so I think that's a big piece is that you're just kind of filling up the funnel and then starting with an idea, it's easy to get kind of lost and then not know what to do next. So we've got kind of a system where we work with them on filling out a lean canvas, which is kind of a one-page business plan. And the customer development, can you validate that idea? Is it really solving a problem for customers who would be willing to pay to have that problem solved? And figure out who that niche, who that first five hundred customers would be. You're not trying to sell to a million people first. But those, you know, like Facebook is now for everyone but it started for Harvard students. How are you going to be perfect for that smaller group of people?
Michael Iseman: And I guess the other thing, where we talk with people who are kind of at that idea stage is an idea, like any of us could have an idea. It's the execution on that idea that is most important for you, actually kind of moving the needle towards success. And it's fun to have an idea, it's a lot of work to build a company. And so to kind of define reality and set expectations for them.
Michael Iseman: But also let them know, that that idea, if you just keep it...Because people are very, very protective of their idea for the new app or the new whatever it is. That idea itself isn't going to turn into anything unless you talk to people about it. Partner with people, get feedback from customers because you're not 100% right with that first idea, you need to iterate. And so, people have stolen ideas, and there's plenty of historical lawsuits out there, but it's not as...I think that talking to people is a risk that entrepreneurs need to take with their idea. Obviously, don't do business with people you don't trust, but it's not going to grow into anything if you don't start talking about the idea and growing.
Jeff Standridge: To give you an idea, between the Northwest Arkansas team and the Central Arkansas team we will finish 2018 having had 1,200 of those kinds of conversations, those one-on-one coaching, consulting, what have you. Sometimes they'll be repeat visitors who will come back multiple times. Sometimes we'll give them some tough homework in the beginning, and they'll go away and say "Yeah, I'm not really interested in.." Too much work. But that's a rarity. You know, many times they come back for more. Thank you, sir, can I have another?
Michael Iseman: And, two, I don't feel like I gave a very good answer to your 'what's our role in the ecosystem' and thinking about that more. Really, it's a connector. You know, those initial meetings, they'll leave with four different resources that we think they should read or fill out. Two different service providers that they should talk to, to do their accounting or different aspects that they need. And then three mentors who have been there five years and understand the path better than we do because they've got some specific knowledge on it. Connecting people with talent, with capital, kind of that role. There's been different partnerships that come out of people just meeting at an event that we put on. You meet the people you didn't know you needed to know. And I think that, bringing people together, connecting them, is probably the biggest role or biggest way that we can move the needle for the entrepreneurial ecosystem. And all of those different events and programs and things that we do are kind of filling that.
Jeff Moore: Is that maybe one of the benefits of shared space and some of these tech parks and whatnot, like the technology park here in Little Rock?
Michael Iseman: Yeah, I think so. I mean...
Jeff Moore: Collaborate and...
Jeff Standridge: Creative collision. You don't anticipate it happening, but it does.
Jeff Moore: So from a community standpoint, we obviously, as the AEDC, one of our primary goals is to help the local communities grow. And that is to bring in business, industry, higher paying jobs, into all areas of the state. What advice could you give, what direction could you give to communities on how they can become involved in encouraging this sort of growth and activity in their communities?
Jeff Standridge: The first thing that I tell, and I get the opportunity to work with communities through either the Community Development Institute at UCA or the Uncommon Communities through WinRock, the WinRock Institute. And I always tell them that number one is, start where you are. And that generally means don't go build a building. Or buy a building. Because what I have seen in many instances is they say "If we just had a place..." And they go buy a building, they fit out a building, kind of the Field of Dreams 'If we build it they will come.' And then they're so strapped with the overhead of that building that they don't have the bandwidth to go really fill it up with programming.
Jeff Standridge: And so, the Conductor, we started as a movement. And we begged, borrowed, and stole space. We didn't literally steal, but we begged and borrowed for space, and we still do today. Any event might be in a variety of different places that we have. And the movement grew to the point that Conway Development Corporation, our city utility, came to us and said we want to provide a space for this. So they have acquired city hall, which is right in downtown Conway. City Hall has outgrown it and is moving to a new building. And we're in the process; actually, I have a meeting today with the architects, second level design to refit that building to turn it into the Arnold Innovation Center named after Richie Arnold the retired CEO.
Start Where You Are
Jeff Standridge: So start where you are, that's exactly what Conway did. Is we didn't know where we were, we formed a little team, started asking questions. We knew we had a lot of gaps. Brought in Jeff Amerine and his team to do some assessment of where we are, and then come back with some recommendations that were very specific to us. Start where you are, don't build a building, plug into the ecosystem, reach out to, whether it's Innovate Arkansas, Startup Junkie, the Conductor, FinTeach, Venture Center. Call you guys. Call somebody in the ecosystem and start making some connections. Those would be the biggest things. Michael, you may have some others.
Michael Iseman: Just tactically, start with that culture piece, the movement. Startup Weekend is a program that TechStars puts on, where you bring in...it's not a very costly event, but you bring in people who have an idea and form teams. Everyone pitches an idea right at the beginning of the weekend, you form teams, and then by the end of the weekend you're pitching a business. And in fifty-four hours people have actually created businesses. More technology are familiar with Canon and Peyton and that team. They formed a new modular robotics company out of the last Startup Weekend in April and now they're gearing up for a Kickstarter campaign and have raised some capital. And building a 3D print farm.
Jeff Moore: It's just crazy, isn't it?
Michael Iseman: It's insane and [Cannon 00:41:22] was on our podcast five months ago, and all of that's outdated now. It's incredible what they've been able to do.
Jeff Moore: But that's something that's pretty easy. It's a weekend, you need a space, you need people to get together, and some resources for them to try and build a company.
Jeff Standridge: Tiffany Henry over at Russellville. Tiffany came to the Conductor to one of our IdeaFame Live which is a pitch competition, which is probably the lowest barrier to entry to run a pitch competition. And she started coming to some of our Conductor events, plugged in with Kim and me, asked us for advice, brought us to, she was employed at Arkansas Tech at the time, brought us and we met and gave them some thoughts and advice. She just really became the champion. So I guess that's the next thing I would say is start where you are, don't build a building, plug into the ecosystem, and identify a champion. She was that champion and started running some events there in Russellville. And she now has transitioned to becoming a program officer with WinRock Institute and her role is focused on community entrepreneurial development. So, she created kind of a space for herself, but she was an example of someone who just did those things, plugged into the ecosystem and started championing the cause.
Michael Iseman: Yeah, IdeaFame Live was going to be the other thing that I brought up...
Jeff Standridge: Sorry to steal your thunder.
Michael Iseman: No, you're fine.
Jeff Standridge: I feel bad now.
Michael Iseman: Well, you should. It's a one-night event where you pitch an idea. We can get twenty to forty people there to pitch in sixty seconds and then there's a crowd vote and a judges' vote for a thousand dollar check. So that's a good way to get people to come out. If you're pitching your idea, then you're probably going to bring as many people as possible because you want to win the people's choice, the crowd vote, and so it's a good way to get not only that local champion but twenty-to-forty other people who are pitching to promote an event. You get people together and then you kind of create some of that energy.
Jeff Moore: Develop some momentum there.
Michael Iseman: And then just kind of continue to build. Start small, start with the people and the community aspect I think.
Clark Cogbill: Sounds like it turns into almost like a Razorback game or something.
Jeff Moore: I'm a Southwest Texas boy so when you're talking about building the building, I think that's where we all want to go, right? Like "Let's build a building, we can put a sign on it, and it's a park." We have this saying in Southwest Texas- Big hat, no cattle. You can have a big hat, but that doesn't mean you really have anything going there. SO I think that really resonates with me, just because, coming from the advertising world the creative world I came from, we always used to say "A great idea is a great idea on a napkin." You don't have to think about throwing a lot of money at things initially. If it's a great idea, it's going to look good.
Jeff Standridge: A team of committed change agents can literally transform the world. And so I would give that guidance. If there is a champion out there who wants to champion that cause, find two or three or four other people. Cast the vision, get them on board, and go change your community.
Clark Cogbill: That might be the quote of the podcast. Let me ask both of you because, Michael, you asked a good question of us, what is a memorable story that you could each, Jeff and Michael, share about your experiences with the Conductor and Startup Junkie?
Jeff Standridge: I've got a couple, but I'll share one with you right quick where I see so many entrepreneurs struggle, and Michael talked about customer development and getting that and talking. We had an entrepreneur come to us, mid-thirties, very successful, person. He said "I've got an idea for an app, and it's going to change the world. It's going to be very disruptive." Had it sketched out on a legal pad, very intricate designs, and he was right. I think it was very very disruptive for the real estate industry. He said I've saved up $10,000 and I just need you to point me to a developer. Nope, not going to do that until you go talk to some folks. Go talk to a hundred people whom you think will be prime users of that app.
Jeff Standridge: And he left and came back about eight, nine weeks later, and said "I need to tell you two things. I didn't talk to a hundred people, I talked to fifty, and not one of them were willing to pay $1.99 a month for my app. And as a result, it's not going to work." And I said, "Well, what do you mean?" And he said, "Well if I had 8,000 downloads at $1.99 a month I'd be break even. Since not one single person of the fifty I've talked to are willing to pay for it, then I've got to give it away for free so that I can sell advertising. And there's no way that I'll have the advertising budget to get enough downloads to make it marketable for advertising. So I'm changing my idea. The second thing I need to tell you is 'thank you' because you saved my life savings."
Jeff Standridge: So what would've happened in that instance is he would've gone out, taken his life savings, plunked it into an idea that was doomed to fail from the beginning that he didn't know. And as a result of us really making him do the homework, and had that happened he would lose that $10,000 and would be burned on being an entrepreneur ever again, alright. And so because he didn't do that, he went out and did the homework, he didn't spend his money on a failed idea, he now has the opportunity to come back and pivot and rethink about that idea, an adaptation of that idea, or a different idea. And he still has his nest egg over there for when he does get one where he can get some customer validation.
Clark Cogbill: That's a great story.
Michael Iseman: Yeah, mine's smaller and something happened recently. My friend Omar Kasim, he started both Juice Palm and Con Quesos up in Northwest Arkansas, two restaurants up there. He reached out as they were opening up their next location of Juice Palm up at the Eight Street Market and he said, "Hey, are you going to be there?" And I couldn't make it up there because I had family in town. And he said "Oh man, I was going to give you a shout out. This wouldn't have happened. I was right when I told you that when you invited me to this pitch contest of young professionals summit a year and a half ago, that I wasn't going to win because it's a restaurant and they never win at these things. But, that's where I met someone who basically was the connection to opening up this new location and one of the most happening places in Bentonville now."
Michael Iseman: And so that, it just kind demonstrates pretty well. It's hard to measure these things. But these connections and events and programming culture that we are working to build just kind of gives that framework for those serendipitous moments. It's like the engineering serendipity which doesn't work. You think too much into, but, if we can create those environments where you put the right people in the room together, then really great things can happen, and there's been a number of different stories like that, but I always like to give Omar a shout out when I can.
Clark Cogbill: And both of your stories go back to something you said earlier, Michael, and that is don't be afraid to talk to people. Because you're going to get insights from your potential user base or you're going to meet somebody who's going to help steer you in a different direction, in the right direction. So that's an important takeaway.
Jeff Standridge: And I don't want to segue too soon so stop me if I do, but one of the next stories that is a little more measurable has to do with the 10x Accelerator that we're running in Conway right now. Actually, they just graduated on Tuesday night, our second cohort, which was done in partnership with the Arkansas Economic Development Commission and the accelerator fund that I mentioned a few moments ago. So we had a company there, and I think they're going to be one of Arkansas' next great startups, called Listing Village. And they are an app for realtors, and you need to check them out. They will tell you, and they did on a podcast recently and shared with us, they have grown their user base over 9.75x. So they are over 976% growth since starting the program last March in terms of their user base. Their revenue will catch up to that relatively soon. And so they've not only 10x'd, effectively, their user base, they've been accepted into the Y Combinator Startup School and are participating in that program as well, so that's a very measurable example.
Jeff Standridge: We have another company who said, "We've added twenty employees." Another company who said, "We're three months out, and we're 2x, and we expect to be 3x by the end of the year." And so, there are some real, measurable examples and I know that those will come from the Fuel Accelerator as well so, to go back and tie it back to the partnership with the AEDC, that wouldn't have happened without that partnership.
Jeff Moore: Therein lies my point to my fourteen-year-old daughter Magdalene. That algebra does come into play in your business life.
Jeff Standridge: That's exactly right.
Jeff Moore: 10x. There you have it, Magdalene.
Michael Iseman: I had actually an accounting professor, or I think it was an accounting professional that came in and did a talk at the Walton College when I was going to school there, and he said, "Who uses algebra every day?" And no one raised their hand. And he says, "They don't teach you algebra to teach you how to do algebra, they teach you do to algebra to teach you how to think." Where, that's the first time that you're really faced with multiple step problem solving, and that's helped me appreciate algebra a little bit.
Jeff Moore: That's amazing because, almost verbatim, that's what I told my daughter. Yes. They're not teaching you algebra so that you will utilize algebra; they're teaching you how to learn and think.
Jeff Moore: So, as we come to a close here, I think we're probably all, you know, about out of ideas. Except for Jeff, I think he still has some. Wait, Clark has an idea!
Clark Cogbill: We represent three organizations on this podcast, so I thought it would be helpful for anyone who wants to find out more, for us to go around the horn and give out our website address. I'll start. The website address for the Arkansas Economic Development Commission is arkansasedc.com
Michael Iseman: And Startup Junkie is startupjunkie.org, and we've mentioned Fuel Accelerator which is a program funded by the AEDC a couple times; want to give a quick plug about that. That's fuelaccelerator.com where we've partnered with RevUnit on a supply chain accelerator that has enterprise partners like Walmart and others that, I think, will be transformative for Northwest Arkansas. We're bringing different innovative supply chain companies that are interested in working with large enterprises. And there's an enterprise-ready curriculum for that as well as a supply chain curriculum and so, more to come on that. But it's been a great partnership with AEDC and just wanted to thank you for that.
Jeff Standridge: Absolutely. And ours is arConductor.org . Access to a number of resources there. Hopefully, soon, there will be a new application to our second iteration of the 10x Accelerator, so we're very excited about all those things we've got going on.
The Innovator's Field Guide
Clark Cogbill: And as part of this podcast, we are offering a free book written by Jeff Standridge, here with us today.[crosstalk 00:51:38] It's one of several books that you've authored, but this one is called The Innovator's Field Guide: Accelerators for Entrepreneurs, Innovators, and Change Agents. And there's a limited supply that we're going to give away for free. Act now. You can go to arkansasedc.com/innovate. Jeff, why don't you tell us just a little bit about this book.
Jeff Standridge: Absolutely. So, in doing the research for the book, I learned that the vast majority of books are never read cover to cover. So you start with them and then you fizzle out after about a third to a half, maybe two-thirds of the book. And so I wrote this book specifically to address that issue. We talk about accelerators being extended programs that cause entrepreneurs to really rethink their business. So what I've done with the book is provided fifty-two accelerators. Stimulants, hopefully, that will cause people to rethink their business, their work situation, their company, et cetera. And you know you can do one a week for a year, two a week for six months, three a week for four months, or four a week for three months, I guess, right? [crosstalk 00:52:46]
Jeff Standridge: Each one has the exact same format. It starts with a teaser title that you might not understand what it means. There's a, generally, a quote that unpacks the content a little bit. There's a 350-500 reading that is, in fact, the accelerator. And then there are three or four questions at the end, or actions, or what have you. And they're all written exactly the same.
Clark Cogbill: So for people who think they don't like to read or don't have time to read, this seems perfect because it's broken up in bite-sized pieces of all these accelerators.
Jeff Standridge: The real value of the book, and this is what I'm being told by people who have bought it, is they keep it on their nightstand. And that the real value of the book is in the thinking that it stimulates following the reading of each particular accelerator. And the actions that they take as a result of that.
Jeff Standridge: I've had public school systems purchase copies for all their administrators, I've had state correctional school districts purchase for theirs. I've had companies buy for their employees, and that's generally the feedback that I get. It's the thinking and the action after each accelerator that's really been transformational for them.
Jeff Standridge: So I'm very humbled and honored that you guys would offer it to your listening audience and I'd love to hear any feedback that folks have. I tell people if you don't like, you soak it in kerosene, and it makes a great fire starter.
Clark Cogbill: And again, you can go to arkansasedc.com/innovate, and there's a limited supply of free copies, but you fill out the form, and we will mail you a free copy of Jeff Standridge's book.
Jeff Moore: And just thank you guys for being here. I love hearing these stories, I love hearing more about what you're doing in the state, and I just want to encourage any folks out there who are listening who have ideas. Don't sit on those ideas, don't hold it tight in your hand. Hold it with an open hand and invite some of these folks from Startup Junkie, Conductor, other places in the state that may be able to help you up in Northeast Arkansas. With The Garage, and such. For the communities, just want to encourage you guys to continue to work alongside us as we continue to grow this very important piece of business.
Jeff Standridge: And I want to say I appreciate the partnership that we have with you all- it is vital to our ecosystem, and our clients are the benefactors of that relationship. And a special thanks to Director Preston for the leadership that he provides and to our Governor Hutchinson as well. It's really really refreshing to have folks in leadership roles in the ecosystem who really understand the impact.
Clark Cogbill: Ditto. We also appreciate the partnership.
Jeff Moore: With that, we've conducted a dual simul-cast. And we didn't fracture. [crosstalk 00:55:18]
Jeff Moore: This has been the Arkansas Inc. Podcast. I'm your host, Jeff Moore. To learn more visit our website at arkansasedc.com Thank you for listening.