Deep Dive with Kristian Andersen

Speaker 1: Welcome to The Daily Bolster. Each day we welcome transformational executives to share their real world experiences and practical advice about scaling yourself, your team, and your business.

Matt Blumberg: Welcome to The Daily Bolster. I'm Matt Blumberg, co- founder and CEO of Bolster, and I'm here today with my friend Kristian Andersen. Kristian is a partner at High Alpha, a B2B SaaS venture studio and seed investor, and someone I've known for about 10 years. Kristian, good to see you. Thank you for being here.

Kristian Andersen: Good to see you. We go way back, Matt.

Matt Blumberg: We do. And that's perhaps where we should start our conversation today. So when I met you, you were running Studio Science, which was an agency that I think you started and we hit it off. We brought you in to Return Path to revamp everything. And so let's start there. How long was your run at Studio Science from starting at until you left to start High Alpha and what got you there and what was a little bit about that part of your journey?

Kristian Andersen: Yeah, sure. Can I do one quick aside Matt?

Matt Blumberg: Sure.

Kristian Andersen: You've been in a room when I've told this story and I know you always cringe a little bit, but I love telling this story and I want your audience to hear it. So I didn't know Matt, but we had gotten connected through a business partner of Matt's and a client of mine. And the team flew to New York and we had great set of interactions with Matt's team. And at the end of the day, I had not met Matt yet, and Matt walks into the conference room in shorts and flip- flops in a Hawaiian shirt. And I'm like, okay, this is the real,-

Matt Blumberg: I'm cringing already.

Kristian Andersen: He's going to ask some tough question to knock us off our game. And he sits down and he's delightful guy, has a smile on his face and he goes, " Well, the team said they had great set interactions with you. We really kind of admire the work you've done historically. I've really just got one question for you question before we consummate this." And he said, " What's one thing we can do to be the best possible client for you?" And I was stunned. No one had ever asked me that question. I could have answered 1000 other questions, but it took me a couple minutes to get my footing. I was just so blown away. And our team came back to the office and we shared that story. It became part of the lore of how we think about how can we be great customers and great clients so the people that we work with, and Matt being exaggeration to say not a day goes by that I don't think about that, but I think about that an awful lot. And the affection and engendered on the part of our team and the way we hustled and worked for Return Path as a result of that one really simple question. So thanks for indulging me. I just wanted to share that.

Matt Blumberg: And thanks for making me cringe again.

Kristian Andersen: Yeah.

Matt Blumberg: No, I mean look, I fundamentally believe when it comes to agencies, although it's not just agencies, when it comes to any business partnership. But I think it's very true with agencies, that it's about the partnership and about the relationship and it's not about throwing things over the wall to a vendor and hoping it works, so.

Kristian Andersen: Yeah, it was, anyway, it was really cool. All right, well I'll tell you, I'll,-

Matt Blumberg: All right. So let's talk about Studio Science.

Kristian Andersen: Let's spin through my story. Okay. So I grew up in a very rural part of the country in North Central Arkansas. And from the time I was really a little kid, I had a pretty clear vision of what I wanted to do for a living. And when I say a little kid, I mean seven, eight, nine years old, I knew that I was interested in design. I wanted to be a designer. Way back then they called it commercial art. Can you believe that? So kind of the,-

Matt Blumberg: Graphic design or commercial,-

Kristian Andersen: Graphic design, commercial art. And I was the kid that for Christmas, I asked for drafting tables and airbrushes and T- squares instead of Transformers and GI Joe. And my dad, who was a creative himself, ran a very successful architectural and interior design firm out of New York, indulged that. And we did not have a lot, my dad and I did not have a lot in common. I love sports and the outdoors and he was more into piano and architecture. But there was one area where we had a mutual love affair and it was with the aesthetic and the ability that we could kind of inform our environment and our context and we could make wholly new things with design as kind of the impetus for that. And so I grew up, oddly enough, kind of always knowing what I wanted to do and had a pretty strong entrepreneurial bent as a kid. Never had a real job, but was always making more money than my friends that did. And ended up in school and studied design. Right out of school, I took a job with, this will show you how old I am, in 1997 with one of the very earliest kind of incarnations of an internet company. It was a terrible idea. They were building internet connected kiosks installed in gas stations where you could, it was basically very early eCommerce. So you could buy things at these kiosks in the mid 90s. And it turns out that when people are buying Slim Jims and Moon Pies, they're typically not in the market to buy a$ 400 phone from the sharper image. So that business did not flourish. And then six months later, I find myself out of a job, but my employer at the time kind of as severance gave me the graphics workstation I was working on and was really handy in making some early referrals. And I ended up hanging out in my own shingle as a 21- year- old. And I was fortunate enough that right around the time I started that business, there were a number of companies based in Indianapolis, which is where I was making my home at the time, that were starting that turned out to become really big businesses and you know many if not all of them, but Aprimo and Angie's List, an Exact Target. And they all became customers. And I was fortunate enough to be able to grow Studio Science and lockstep with those companies. So I was in the land of the blind, the man with one eye leads. So this was the time when if you were a designer with any kind of technical fluency at all, there was a lot of opportunity for you. And we were doing everything. Right. We were building websites and configuring email servers and hosting those websites on cruddy little workstations, shoved underneath our desk and got just a remarkable education on the intersection of technology and design. As that company grew through the largest and generosity and success of our customers, we did something really interesting, Matt. We started taking equity positions and we're talking like late 90s, early 2000s here, we started taking equity positions on our customers in lieu of kind of full compensation. And that really gave me a back door education on the world of kind of early stage startup finance, which led to me becoming a rather prolific angel investor. And around the mid 2000s, my now partner Mike Fitzgerald at High Alpha, he and I launched a very ragtag venture fund that was most our LPs were our friends called Gravity Ventures. And we subsequently raised six funds and we kind of ran that out of Studio Science, out of the studio,-

Matt Blumberg: I did not know that. That's really interesting.

Kristian Andersen: Yeah. And they were like, they performed extraordinarily well, kind of going back to, we have a saying in Arkansas, which is if the wind's blowing hard enough, even turkeys can fly. And so this was a period of time where there was a dearth of capital in the Midwest. We were fortunate enough to raise some and we got a reputation for writing$ 100,000 checks two weeks after meeting a founder. And so a couple of years in, we're getting 1500, 2000 pitches a year kind of through the transom and we're able to capitalize on that. So early on I'm kind of learning how to run a services business. I have a very crude understanding of the economics of venture. And at some point I'm looking around going, do I want to be selling brains by the pound for the rest of my life? And at Studio Science, we had MBAs and strategy people and designers and engineers, and we made the decision to start starting companies and we launched a handful of endeavors out of the studio, which became real companies. One of those, you've had Max Yoder on this podcast, and Max was one of our early partners in doing that with what ultimately became Lessonly. So to me that kind of 15 year period of consulting, and designing, and investing, and then moving into that co- founder role is really what I think prepared me for what I'm doing now.

Matt Blumberg: Yeah, it's funny. I'm not sure I knew, I definitely didn't know about the venture fund and I'm not sure I knew about business incubation either. So that's the bridge. That totally makes sense.

Kristian Andersen: There you go.

Matt Blumberg: Before we get into High Alpha and what High Alpha is, so you started Studio Science, you didn't take venture investment.

Kristian Andersen: No.

Matt Blumberg: And so presumably you owned it or owned most of it.

Kristian Andersen: Yeah, owned 100% of it. We did do something, again, nothing novel today, but 15 years ago was quite novel, which was we did create a separate entity that held the equity in the companies that we invested in.

Matt Blumberg: Right.

Kristian Andersen: And shared that radically with our staff. So our entire team of 45, 50 folks were able to participate in what looked a lot like carried interest in the work we were doing at Studio Science.

Matt Blumberg: Yeah, the employee centric leader in me loves that obviously. So when you decided to leave and start, High Alpha, how did you think about what to do with Studio Science? So if my understanding is right, you have hired a new leader and management team, presumably you still own it or own a bunch of it?

Kristian Andersen: No. So I'll tell you the story. So in and around 2014, 2015, I started getting inbound from investment groups, private equity in particular. And if you had told me 10 years prior that there was ever going to be a market for a Midwestern design focused studio for an economic buyer, I would've looked at you like you had two heads. But we live in a very strange world, Matt. And so around 2015 I started getting some inbound interest in acquiring the company, which I had never conceived of. It was a fast- growing, profitable super fun business and I imagined I would do that for the rest of my life. But as you know, when you allow yourself to think about that alternative, it really can kind of open the aperture around what's possible. And I ended up getting very close to the finish line with one group and I had seen enough M& A transactions through my lens as investor to know that if they tell you it's going to be done in three months and you're still talking about it nine months later, that's not a good sign. And I ended up hiring a really talented executive named Steve Pruden out of a company called Appirio, which was a very large cloud consulting company based in Indy to take over as CEO. And I said, " Here's what I want you to do. I want you to either get this business sold to this particular buyer," and I incentivized him to do so, but I incentivized him even more to not sell it to that buyer. Meaning if you can get a deal done quickly, it'll be great for you, it'll be great for us. If you can't, I'd like you to run it, like run through the tape. And he got excited about that and join the company as CEO. I took a very big step back and about six months into that he came back to me and he said, " Listen, I know exactly what you want because I've been running this process on your behalf." And he said, " I've got a group of investors that want to give it to you and we want to buy the company from you." And so Steve and I worked out the details of that, and I do maintain a small equity position in the business, but for the most part I sold the vast majority of it to this group. And they've done remarkable things with it. It's really flourished under Steve's leadership. So as that transaction was being consummated Matt, around the same period of time is when my partner Scott and Mike and Eric who were all at Salesforce by way of the ExactTarget acquisition, were beginning to think about what's next for them. And we had been longtime friends and collaborators, had invested in each other's businesses, worked for each other's businesses, and we knew we wanted to do something together.

Matt Blumberg: Yeah. So before we jump to High Alpha, let me just ask one follow up on Studio Science because that's really interesting. So you've maintained some equity position, I don't know if you're on the board, but you're still in touch with Steve, I think.

Kristian Andersen: Sure. Sure.

Matt Blumberg: What have you learned in the eight years since you stopped being CEO by watching someone else run your company? It probably doesn't feel like your company anymore maybe, maybe it inaudible. But it had to the first couple of years. Was there something you learned or some aha that you had about either the business or your own leadership profile from watching someone else kind of take the keys to the car?

Kristian Andersen: Yeah, sure. The business has changed pretty significantly. What Steve has done, and he'd do a better job of articulating this than I would, but we were a design first consulting business. So what that means is the inmates were kind of running the asylum. Right. So it was mostly designers on the leadership team. I was a designer, and designers have this weird kind of peccadillo, which is the most important thing for them, is doing great design work. That sometimes means that other very important aspects of running a successful business get subjugated. Right. Take net margins. Right.

Matt Blumberg: I was going to say finance is the word that comes to mind.

Kristian Andersen: Right. And I would say I had a strong grasp of how to run a successful profitable services business, but if it was ever a jump ball between doing work we wanted to do and sacrifice margin versus maybe doing work that we weren't as enthusiastic about, that would maybe be a lot more profitable for the business, there's no question. We're like, we're going to do the fun gratifying thing because we had this kind of missional creative bent in what we do. And so I did not run the business in a dispassionate way, for lack of a better word. And the good news is that it worked out. I mean, I loved running that business. That business was in fact quite profitable and launched a lot, maybe what I'm most proud of is launched a lot of careers and people that went on to do much bigger and better things. When Steve took over, he's not a designer, he's a cloud platform consulting executive, right, and he's got an engineer's mind, he's a professional race car driver as well. And he tends to think about the physics of business differently than I did. And he realized there were a lot of opportunities that we had been saying no to that if you could feather in that really strong excellent design aesthetic to some of these maybe what would've appeared to me as the time as less interesting opportunities, you could build something really, really fantastic. So they've really pivoted the business. It's still a design first company, but they are basically the marriage of a design firm and a systems integration firm now. So they've built partnerships in particular with Salesforce and for Salesforce implementations for which design is an important component, they're becoming really kind of a preferred vendor for that. And it's so obvious. I don't know why I didn't see that. I don't know why I didn't pursue that. But Steve and the team has and he's brought a lot, he's very consensus driven leader. He's built a remarkable board and really feathers their input into the direction of the business in a way that I never did. Frankly, I enjoyed being the boss. I enjoyed making the decisions whether they were right or wrong. And when I think about some of the things that might've slowed the progress of the business, it's probably that I did not seek out plurality of opinions as aggressively as I should have. And Steve does a remarkable job of that.

Matt Blumberg: That's great. I mean, look, there's someone, and I'm drawing a blank at the moment, who I have also interviewed for The Daily Bolster who has a routine, oh, it's Steve Sloan from Contentful has a routine called something like fire yourself. And he has a practice of saying, all right, if I'm not doing my job and someone else is coming in to do my job, what are they going to find and what are they going to do? And I think it's true that different talented people will have a different take on the same thing or a slightly different take on the same thing, so.

Kristian Andersen: Sometimes it's not even inaudible. You're just a slave to momentum. I mean, kind of along the lines of the quote you just shared, a therapist asked me once, " If you were taking over your life right now, what would you do differently?"

Matt Blumberg: Right.

Kristian Andersen: And that's a really interesting question because that's not somebody else taking over with a different set of experiences and expertise. That's like you. And that question really forces you to think about what am I doing today purely as a function of inertia and momentum? And yeah, I think it's an important question to ask and one frankly that I probably don't ask myself enough even as I sit here in 2023.

Matt Blumberg: Yeah. All right. So let's talk a little bit about High Alpha. You are now one of the four partners who runs, I would say, leading venture studio. You all are in the business business of creating and co- creating companies as well as funding companies. Are you having fun? Is it as fun as it sounds? At some point, is there a process you're following like every other job and it becomes a little bit of a grind?

Kristian Andersen: Well, there's plenty of grind to it, but again, at the risk of sounding cliche, anything worth doing excellently, there are going to be periods that it's more work than fun. With that being said, I told you as a little kid, I wanted to be a designer. If I had had a more expansive vocabulary as a 9- year- old, I probably would've described my dream job as something shockingly similar to what I'm doing now. My partners and I, we all have different kind of skills and to some extent maybe even different interests, but the stuff that matters, there's tremendous amount of overlap.

Matt Blumberg: Right.

Kristian Andersen: And we love startups, but I think more importantly, we love the people who start startups. So we have a very relational kind of orientation at High Alpha. And when I think of the intersection of great design, finance, operating and loving on people, this is a dream job because when you're starting companies with co- founders, you are getting a front row seat to the toughest, hardest, most challenging span of time in many people's lives. I mean, it is hard. There's a quote from Shackleton, the great Antarctic explorer who says, " By endurance we conquer." And the building of a startup is an exercise in endurance. I heard another, I wish I could think of who said this. I heard another quote recently that was, " Excellence is your ability to withstand pain." Matt, you know this. You're like in the middle of it right now. It is hard. It is painful, but it's worth it. And if done rightly, like if you're healthy, like an emotionally cognitively healthy person, you understand that pain for what it is, right, which is it's a stimulant to growth.

Matt Blumberg: Yeah.

Kristian Andersen: And I think you might catch me on a Wednesday afternoon at 2: 30, and I might tell you something different, but my general orientation is we kind of embrace this hard work because, excuse me, we embrace that work and that pain because that's really the only way you build something that's exceptional. No one's ever built anything exceptional that wasn't extraordinarily hard. Of all the things I've started in my life, the ones that have been successful, there was never a point where at some point I didn't roll over to my wife on the verge of tears and say, " Why did I start this?" There's some point where you feel like you're going to break and I don't always recognize it in the moment, but in hindsight, I look back at those moments and I'm like, ah, we're onto something now.

Matt Blumberg: How do you balance in the studio? I mean, you guys create, co- create half a dozen companies a year, maybe more, right?

Kristian Andersen: Yeah, that's about right. Yeah, five or six a year. Yeah.

Matt Blumberg: So how do you balance needing to have sort of consistency and discipline of process, and you're focused on B2B SaaS, so it's one kind of thing and a repetitive motion? How do you balance that with the need to be extraordinarily creative and know every company actually is different?

Kristian Andersen: Yeah. Yeah.

Matt Blumberg: How does that dynamic work for the studio? Or how does it work for you as a design professional or former design professional?

Kristian Andersen: Yeah. Yeah. I think there's probably two for us. Everyone else's mileage may differ. For us there are, I think, maybe two things come to mind. The first one is engineering very specific rhythms into your work week that are designed for you to engage in generative creative curiosity, indulging activities, and then having some more particular structure around the rote process oriented things that have just got to get done. And I would argue it's actually the biggest challenge in our model. It's not an insurmountable challenge, but it's one that requires a lot of intentionality on our part. So for me, for example, my whole week is kind of meetings, but I don't do any meetings until 11: 00 AM. Hard stop. So I have this three or four hour block every day where I'm not sitting in somebody else's meeting, where I'm not working on somebody else's problem necessarily, where my mind, for lack of a better word, is allowed to go places that it wouldn't normally be allowed to go if the first staff meeting was at 7: 00 AM and you were running through the tape until 7: 00 PM. So engineering rhythm,-

Matt Blumberg: You just described my day today.

Kristian Andersen: That's perfect. I mean, but I think it's really important, and people are different. So different things work for different people, but for me, my partner Mike, says, " Unstructured time leads to exponential productivity." So baking in some unstructured time every day, and really protecting that religiously is important because the world is trying to infect that time with its own agenda. Right.

Matt Blumberg: Yeah.

Kristian Andersen: So that's one. So engineering kind of the appropriate rhythms. The other one is the composition of the team. So we, both at the partner level, the leadership team level, and the IC level, excuse me, we have people that both know and are oriented towards certain types of work patterns. We have people that are incredibly process driven. We have people that are incredibly generative and creative. And by the way, those are not obviously necessarily mutually exclusive, but we're very good about knowing where our power alleys are, where our power lanes are, and deploying the right resource into those things. But we, I would say, I don't know if it's every six months or every 12 months, but on a pretty regular basis, we have to step back and say, is the process overtaking the purpose? And sometimes we have to do the opposite, which is we're really executing purposefully, but we're suffering or moving slower than we could or delivering work that's not as high quality because we don't have the right structure and process in place. And anyone who tells you they've nailed that and two years later they're operating the same way, is just not telling you the truth. So it requires a constant kind of recursive, revisiting load balancing between the kind of structured process and the more freeform creativity.

Matt Blumberg: Yeah, that's a really interesting way of thinking about it. All right, last topic, Indianapolis. I tell people all the time about Bolster, about Return Path and we have a big presence in, or a big part of the company. I wouldn't say a big presence in Indianapolis, but a big part of the company.

Kristian Andersen: Yeah, for sure.

Matt Blumberg: And that goes back to Return Path as well. And nine out of 10 people give me a look like where? What? And I've loved having a presence and a team in Indy and it's a great market, but you and your partners at High Alpha have had a really interesting sort of window into the evolution of the city and quite frankly have had a lot of impact on it between ExactTarget and now High Alpha. And I love the work that Brad Feld, our mutual friend has done around startup communities and sort of documenting the Boulder thesis. And so I'm just wondering, as someone who's kind of been on the ground floor of that for a smaller city in the US of really helping build a tech ecosystem there and a real startup community there, reflect on that for our last couple of minutes together.

Kristian Andersen: Sure.

Matt Blumberg: What has that been like?

Kristian Andersen: Sure. And I would encourage whoever's listening to this, don't turn it off yet. I know that asking someone to champion their kind of mid- market, Midwestern city is the last question. You might be like, okay, I think I got everything out of this discussion I'm going to need. Stick around because this is one of my favorite topics. I think you know this Matt. I was born in New York, but grew up in Arkansas and went to college in Indiana. I knew no one here, I had no friends, no family, and really in many ways going to college in this state was like the second epoch of my life. And it was really important for me, at least in hindsight, because it was a place where I had no structural advantage or disadvantage. Right. I just showed up kind of unfettered. And my affection for this city in particular is very strong. I mean, Matt, I think you know this, but I have six children, five daughters and one son, and I named him Indy. So that's one of my many love letters to this community. I was interviewed a few months ago, and one of the questions was, why do you love, the interviewer said, " Why do you love Indianapolis?" And I said, " Because Indianapolis loved me first." And I've always been struck by kind of just the meritocratic nature of this community. It's not wholly unique in that regard, but I think it is somewhat unique in that people don't really care what your last name is or where you went to college. Not that those things can't be important in certain contexts, but they're not particularly important here. And one of the things people, because you look at other kind of rust belt cities, Cleveland, Cincinnati, St. Louis, and Indianapolis has really outperformed them economically. Indianapolis looks more like a Sunbelt city economically than it does its geographic contemporaries. And I'll tell you, one of the reasons I think that's so is that Indianapolis used to be called Indiana no place. It was just so undifferentiated. Nobody thought poorly of it, they just didn't think anything of it. Right. And as I'm sure you've heard, the opposite of love is not hate. It's indifference. Right. So if people are indifferent about your community, that's really a bad thing. And the very thing that made Indianapolis, Indiana no place, I think is what drove its success over the last 20 years, which was, you look at Detroit, it's got a very strong identity. It's based in the automotive industry, Motown and cars. Right. And if you look at the efforts to kind of kickstart the economy in Detroit, and the same thing can be true of, I'll pick on Cincinnati or St. Louis as well. All the kind of new efforts are rooted in its history. Right. So if you look at the Techstars Detroit, it's focused on mobility, right? Because Indianapolis didn't have that, in a way, it was a tabula rasa. And I think for many cities, I mean Silicon Valley was the same way. I mean, pre 1960, there was just almond orchards. Right. So it was a blank slate. And I think it was that blank slate that allowed the city to adapt more quickly to the future, quite frankly, than many of its contemporaries. And that's something that hasn't been studied. That's my own thesis. But if you're trying to start a startup in Cincinnati, it's going to be consumer packaged goods, and you got to get P& G as your first customer. We don't really have that here. I mean, yes, we have big Fortune 500s, but they're diffuse. They're diverse. And so you don't get wed, you don't get anchored to the kind of economic past. And I think that was one of the secrets. I think the other is there is, I do think geographies, the culture of certain geographies are rooted in a form of DNA, right? It is a true fact that people in the Midwest in general, in Indianapolis in particular, are pretty nice folks, right? They're not cynical,-

Matt Blumberg: The expression Midwest nice comes from somewhere.

Kristian Andersen: Yeah, they're nice. I think they have an orientation toward optimism. They oftentimes lack an orientation toward ambition. So you've got a nice, not cynical, optimistic, but maybe not always the requisite level of ambition. And you might contrast that with other big cities in America that maybe are known as less nice places, but have really powerful ambitious motors. A funny thing happened in Indianapolis, and you got to give Scott Dorsey and ExactTarget, so much credit for this, which is they built a breakout business. Right. We could debate how that came to pass, but the reality is it came to pass. And a funny thing about ambition is it's contagious. Ambition is contagious. So we had this flower of ambition blossoming in this, it's a small city, but it's not that small. Right. It's a million and a half people. So it's operating at scale. And oftentimes the illustration I often use is, and I'll wrap this up, I promise, but the illustration I often use is kind of geographic opportunity is typically a function of the overlap between opportunity and access. So if you think about the Bay Area, all the opportunity in the world, boatloads of capital, talent, it's teaming with opportunity, which is why young, ambitious, bright people historically have migrated to that area. And the same is true for New York and to a lesser degree, maybe Dallas, Texas and or Houston, something like that. So think of that opportunity as one big circle of opportunity in the Bay Area. And then you've got the access orb. And if you think of that as a Venn diagram, your ability to access that talent, city leadership, state leadership capital, it can actually be quite constrained because of the competition for it. Conversely, you could look at Topeka, Kansas. The access orb is enormous. I could have lunch with the mayor every Tuesday if I wanted to, right, but the opportunity that resides there is fairly de minimis. There are a few cities in America, Indy being one of them, where the access orb and the opportunity orb are similarly sized, quite large and profoundly overlapping. And so when people talk about the next great cities, that's what I'm always looking for. I'm looking for a city that's operating at scale where there's lots of opportunity and the lay person, meaning the unconnected person from Arkansas's ability to tap into that is significant. And I think all those constituent elements reside here in the city. So come on. If you haven't been, you want to visit our door's always open.

Matt Blumberg: Yeah, that's just a great way of framing the whole topic, access and opportunity. Kristian, thank you,-

Kristian Andersen: We're not getting all that right. We have some work to do around the edges for sure, but there's only a handful of cities I think, that are operating at that intersection at the same level as Indy.

Matt Blumberg: I think that's right. All right. Great to have this conversation with you. Thank you so much for joining me today, and we'll talk soon.

Kristian Andersen: My pleasure. Thanks Matt.