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I think we’re in the middle of a movement right now. I mean, we’re, we are in the middle of a movement right now. You look at the headlines just last year, there are at least three or four dozen major media outlets that have headlines specifically about what’s popping here. And usually media is about a year or two late, too, so, so I think we’re really I don’t want to say in the middle of it, but we’re definitely not pre-movement at this point.
Jay Clouse 0:25
The startup investment landscape is changing, and world class companies are being built outside of Silicon Valley. We find them, talk with them, and discuss the upside of investing in them. Welcome to upside. Hello, hello, hello, and welcome to the upside podcast, the first podcast fighting upside outside of Silicon Valley. I’m Jay Clouse. I’m accompanied by my co-host, Mr. Brunch Aficionado himself, Eric Hornung.
Eric Hornung 1:04
I think I’ve been to every brunch place in Cincinnati, in downtown Cincinnati at this point. And we hit our last one last time you were in town with us, Jay. We went to a place called Goose and Elder. Great name.
Jay Clouse 1:16
Have you been back?
Eric Hornung 1:17
Not yet. No. Waiting for you to come back and visit me in Cincinnati, Jay. I’m lonely.
Jay Clouse 1:22
What’s your go to brunch spot there in Cincinnati?
Eric Hornung 1:25
Gotta be Sleepy B. It’s the easiest, best food most consistent. But the thing is, you have to get there before 10:30. Otherwise you’re gonna wait for two hours. So it’s an earlier brunch. And then they don’t start serving alcohol until 11. So it’s a whole game, Jay. You got to get there at 10:30, slow order the coffee, then get your bloody mary right at 11:00 as your food comes out.
Jay Clouse 1:46
What is your favorite boozy brunch situation.
Eric Hornung 1:51
In the world?
Jay Clouse 1:52
Eric Hornung 1:53
You know, I haven’t really done a crazy, boozy brunch in a while. But when I was, when I was a young buck living in Chicago, there was a place called Local up in Wicker Park. That was nice enough that you didn’t feel like it was a boozy brunch. But that was boozy enough that like you could really get after it, and they wouldn’t limit you. So I would say that, ’cause I’d always get the duck confit wings, which makes you sound fancy, but then…
Jay Clouse 2:18
That’s very fancy.
Eric Hornung 2:19
…drink as many mimosas as humanly possible. But now I don’t really, I don’t really brunch as much, you know. I left Chicago. I left New York. Cincinnati is not as big of a go brunchin’ town.
Jay Clouse 2:29
You’re a mimosa person, not a bloody mary person, not a beer person.
Eric Hornung 2:33
Well, I will definitely take a good man most every once in a while, which is samosa with beer. Or there’s the man mosa which is a mimosa with vodka. But yeah, I’ll have one Bloody Mary. I’m not like the guy who can drink 10 Bloody Marys in a sitting. That’s a lot. I mean, no one should be able to do that. Anyway.
Jay Clouse 2:52
I remember in college, kegs and eggs was a thing, and I just never got behind this. Like, I don’t want beer for breakfast.
Eric Hornung 2:59
It’s no different than like bread for breakfast.
Jay Clouse 3:01
Yes it is. It’s a lot different than that.
Eric Hornung 3:03
It’s just liquid bread.
Jay Clouse 3:04
Well speaking of kegs, today we are talking with Matt Hunckler, the CEO of Powderkeg. With more than 10,000 active members Powderkeg helps high growth tech ventures connect with the resources they need to grow and scale in areas beyond Silicon Valley. Their Powderkeg member platform connects you with a suite of resources to help you play smart and take the next step in your journey. They’re founded in 2017 and based in Indianapolis, Indiana.
Eric Hornung 3:29
I feel like Powderkeg has been just kind of like circling around us for so long. Every Rise of the Rest tour, their name’s on the bus, they’re all around us. And I’m really excited that we’re having Matt on now, just to hear kind of what they’re up to, to name that’s out there in the community in this movement,
Jay Clouse 3:46
Kindred spirits for sure. Powderkeg came across my radar when they started issuing their tech censuses. But before Powderkeg, Matt was running what was called Verge, and Verge was very much in the zeitgeist as well dating back to my Startup Weekend days. Back when there was basically no media at all for startups across the country that weren’t in San Francisco or New York, Verge gave a little bit of coverage and was sort of the, the outlet of note. And so that seems to have birthed Powder Keg.
Eric Hornung 4:19
I mean, you and I complain that there isn’t that much national coverage or coverage now of startups. But compared to what there was, I feel like we are on a steep upslope.
Jay Clouse 4:29
If you guys have thoughts as we go through this interview with Matt, you can of course tweeted us @upsidefm and @Hunckler, H-U-N-C-K-L-E-R. Would love to hear what you’re thinking as we talk with Matt and potentially just ask him questions to make ourselves smarter about this area of the country. You can also email us Hello@upside.fm if you have something a little bit longer, and we’ll get into that interview with Matt right after this.
Eric Hornung 4:53
Jay, this summer we had some fantastic interns, but we were spoiled because we didn’t have to do as much work. So if we wanted to hire someone, I don’t even know what we would do.
Jay Clouse 5:03
It would be really hard to find the quality of interns who really just came to us this summer. I’m already thinking, how are we going to find interns like this? Again, if we ever want to hire a full time employee, Eric, how are we going to find somebody that high quality?
Eric Hornung 5:16
You know, there’s probably nothing out there to be honest.
Jay Clouse 5:18
I think you’re wrong because our friends that Integrity Power Search can help hire the best talent for your startup. They’re the number one, full stack, high growth startup recruiting firm between the coasts, partnering with venture capitalists, private equity groups, and CEOs to build amazing teams.
Eric Hornung 5:32
That’s right. Since 2012, they’ve successfully executed over 600 searches and they’re on track for 200 in 2019. Their clients have collectively raised over 2.5 billion with a B in venture funding, and that’s still going, still counting, Jay. They’re experts in all types of areas, including SAS, autonomous vehicles, artificial intelligence, big data. You name it, there, there if it’s between the coasts.
Jay Clouse 5:58
Basically if you’re hiring, Integrity Power Search is your go to. They are the plug, Eric. And so here’s the plug for them go to upside.fm/integrity and learn more about how Integrity Power Search can help you with your hiring needs. Matt, welcome to the show.
Matt Hunckler 6:19
Hey, thanks for having me. Big fan. First time caller.
Eric Hornung 6:22
Glad to have you here. On upside, we like to start with a background of the founder or the guest. So can you tell us about the history of Matt?
Matt Hunckler 6:30
Sure. History of me is I’ve been kind of an entrepreneurial junkie my whole life. Started my first business in junior high. I was kind of hooked ever since. You know, I grew up in Indiana. West Lafayette where Purdue University is, is where I grew up. But I actually went to most of my college in Bloomington, Indiana, where Indiana University is. And the business I started when I was in college is really the one that helped kind of introduce me to software development, building web apps. And it was just a software consultancy. We did some internet marketing as well. That really exposed me to a lot of different clients and sort of bigger opportunities out there that really, I actually thought I was going to graduate college and move out to quote unquote, where all the technology happens on the West Coast. But it was a program that I got introduced to through a friend who had graduated a year earlier than I did, and it was called the Orr Fellowship, which is sort of like what this national program called Venture for America is now, and they’re in multiple cities around the country, Venture for America. But the Orr Fellowship named after former Governor Bob Orr, that’s O-R-R, fellowship, kind of a mouthful for a podcast. But it really is an amazing program. And it’s the reason I’m still in Indiana to this day. And it is not necessarily a path to the C suite, so to speak, but it’s definitely not an internship either. It was just an opportunity to join a growing technology company and have direct access to the founders. So I joined a cloud hosting company, like literally the year like cloud computing, like, became a thing back in 2009, before Amazon entered the market, and got to kind of ride that rocket ship for about a year and a half. And so, it was when I landed here in Indianapolis, that I really found myself looking for my people, you know, the people…like I know, both of you are former, or at least been involved with startup weekends in the past, you know, it was sort of like, Where are those people? You know, so this is 2009, there was no community to speak of, at least not one that I resonated with here in Indianapolis when I moved to town. And so I had sold my agency that I’d started and gone all in on this Orr fellowship program. And I was like, I’m gonna find every person I know and invite them to grab beers. We’re going to talk about startups. And I had a startup I was working on, of course, I worked at a startup, but then I had my moonlighting startup. And so it was very self serving. I was just like, I just, I want to talk about my startup and have people be brutally honest to me about what’s going on because I’m I feel like I’m hitting some barriers. And joined this group of founders together, and two other friends said, Hey, since you’re getting everyone together, can I talk about my startup, too? And I was like, yeah, sure, of course. So that’s kind of how it all came together. Of course, it was like all of 14 people. It was not not a, not a huge event by any means. But it was a huge success. And the, the fact that I got some great advice, I felt like I could help some other founders by giving them a stage as well. And that really like, what started there in the backroom of a bar 10 years ago has really led to what PowderkKeg is today in a lot of ways. But it all just started with this little acorn have an idea.
Eric Hornung 9:37
And what is Powderkeg today?
Matt Hunckler 9:39
Yeah, great question. So I continued to do community development from from back in 2009. As Indianapolis’s community grew, and we had some really big exits here in the community, and that spawned other startups, I had an opportunity to, in 2013, so all along the way, I’m keeping my day job, right, and, and that’s all was in a lead marketing or lead product role at a technology company. And nights and weekends, I’m growing this community thing. But back in 2013, I was working on a platform called Social Reactor, which was a spin off startup from Chacha, which is a funded company, almost a million dollars in funding here in Indi–
Jay Clouse 10:18
Was that the text based thing where I would text them and ask questions?
Matt Hunckler 10:21
Yep, it’s text 242242, which was ‘chacha,’ you know, on on a T9phone. You could text them any question, and they would text you, text you a response. So this is before smartphones, it was before iPhones, obviously. But they, they really iterated after that, right? So the iPhone came out and they had to adapt, you know, after 2007 when the iPhone came out. One of the things that they did is they started generating their own unique content on their website. It was a top 50 web property on the internet in terms of traffic. And Social Reactor was sort of one of the things that came out of Chacha labs so to speak, which was an influencer platform, an influencer network before influencer networks really existed. So it was always people with huge followings on Facebook and Twitter and Tumblr, if you all remember Tumblr, who were just driving insane amounts of traffic to Chacha. And so I spun that off as its own social influencer platform. And unfortunately, we weren’t able to successfully spin it off, and it sort of died a slow painful death along with Chacha as it kind of like, wound down and sort of like sold, but not in like a hurry it sold, sort of way. Learned a lot in that but decided it was time to take a break and do kind of more of like a lifestyle business. So I took the next several years really just growing the community here. Sprinkled it out into a couple other test markets. So Kansas City and Raleigh Durham were a couple of markets that people had moved, either moved there or they had heard of what we were doing and said, hey, let’s start, we want to start that here, too. And so I kind of experimented with that. But I also got hooked up with Rise of the Rest on their second tour, and I’ve been on most tours since then in some capacity or another, more recently, kind of working with all the founders in each market tell their story on stage at that pitch. They do kind of this pitch competition thing in each, each city helping fund startups in the middle of the country. And it was along that way, seeing all these different cities, talking to all these different entrepreneurs, not just in America, you know, I went as far away as New Zealand and Aruba to startup and tech communities. And you start to kind of see patterns, right? There’s obviously, every community is its own unique and individual snowflake. I’m definitely not saying every community is the same. But there are certainly similarities. And the big problem that I was seeing–some of our data has since backed up–is that the number one problem for these companies is connecting with the best talent and the talent that they need to grow and scale. And so that’s when about two years ago, decided to really launch Powderkeg, the platform, and it is now a network of over 10,000 professionals working in tech and those include entrepreneurs, investors, to developers to customer success folks and account executives, the people building tech companies, the awesome people that you have on your show. And so that’s, that’s why I’ve been a big fan for a long time. But today, we’ve built a platform. We continue to do events, we continue to have media. But the future is really helping connect that right talent with the right company at the right time.
Jay Clouse 13:23
And this community thing that you had been growing along the way, you didn’t give a name to it here on the show yet. That was Verge, right?
Matt Hunckler 13:29
Jay Clouse 13:30
And that was something that I saw across my feeds all the time. And so you build this, this brand on its own, Verge, that births Powderkeg. What was the decision like to rebrand or create a new brand out of this, out of something that you spent so long building?
Matt Hunckler 13:44
So it was a couple of things. First of all, I think we really wanted to signify that we we’re moving from just a community organization to a full product driven organization. Another piece of it is just there was some confusion in the market with other, you know…When you, when you choose a word as popular as that, there’s just going to be other organizations out there creating confusion in the marketplace. And even though we trademarked it and did all the right things, we’re not going to be out there trying to hold everyone accountable to that. And it’s just not the best use of my time as a founder, and you know, kind of growing an organization and growing really what had to become a movement at that time. And Powderkeg was something that I had the .org; I had a line of sight of getting the .com. I knew that it was something that was very unique, and there were no other organizations out there. I actually already had the trademark too, because I’d run a conference in 2012 called Powderkeg just because. And we wanted to, we wanted to differentiate it from our our community organization. So we were able to extend that into software and all the things that we do today, and it was just sort of a natural choice and sort of a really easy marker to say, you know, before launch of the platform and after launch of the platform.
Jay Clouse 14:56
What does it mean to have 10,000 members of Powderkeg? What are the members do, what does it mean to be a member?
Matt Hunckler 15:02
So most of our members are people who have like shown up at our events. So these are people who we’ve actually gotten face to face with, whether it was in Indianapolis or was in Nashville or Raleigh or Cincinnati, any number of these markets that are, are just exploding with opportunity right now in all the tech scenes. And then they stay engaged on the email list. So internally, we talk about a member as someone who has signed up for our email list and stays engaged. So more recently, in the last couple years, we’ve launched this newsletter called The Spark, which is for anyone who’s interested in what’s going on in the middle of the country. They can go to powderkeg.com and sign up for a free weekly newsletter that is just a digest of some of the curated headlines and news in the middle of the country that, that we think, as an organization, people should be paying attention to. And that’s something we’re investing a lot of resources in over the next couple months to really create that digest, add more to it, but make it easier to kind of search visually. So even if you don’t live in one of these communities, we still want to have members of Powderkeg, and we do have members that, that live on either coast, and sometimes they’re looking to come back to the middle of the country, and we help them with that. And sometimes they’re not, and we help them stay in touch as well.
Eric Hornung 16:14
I remember seeing maybe earlier this year that you raised about a million dollars to–and I think the idea was to kickoff this newsletter. Can you talk about that decision and raising money to–and maybe correct me if I’m wrong, and that it wasn’t for the newsletter. But I’d like to hear more about that decision to raise some money.
Matt Hunckler 16:32
Yeah, for sure. I am…This is a topic that’s near and dear to my heart. Fundraising in the middle of the country. And I know it is for you as well. When I first started what is now Powderkeg, the community that has become Powderkeg, first of all, I always say, this is the first business I ever started that was not meant to be a business. Like surely happened out of necessity. You know, I hosted that that event back in 2009. And people were like, cool, when’s the next one? I was like, when’s the next one what? You know, like, I got what, I got my feedback. Like, I don’t have time to be running events. I’m growing a startup and I work at a startup. Like, what do you want me to do? So I literally was not trying to start a community organization. It was one of those things that just grew very organically. The raising money piece came about because of this big opportunity that I saw. And the startup that I was working on in 2009, I was too early. So we were working on non-toxic personal care products, and cosmetics in 2009. So about four years too early for the market. We were also doing Birchbox before Birchbox was a thing, so there, it was a subscription, ecommerce delivered direct to your door, and it was a curated marketplace all rated by EWG, the only nonprofit rating these products. We did a lot of things right, but we also did a lot of things wrong, and the biggest thing we did wrong was not timing the market right and/or not staying with it long enough for the market. So really the big opportunity with Powderkeg, I’ve been watching this Obviously since 2009, since, you know in 2011, I went down to Kansas City and had, there was this huge global meetup of all the Startup Weekend organizers, all the startup digest organizers.
Jay Clouse 18:11
I was there!
Matt Hunckler 18:11
Were you really? And maybe we grabbed a beer and like didn’t even realize it. But there were, I mean, I think there were probably, what, 2, 300 people there from all over the world.
Jay Clouse 18:20
Yep. Did you go to Vegas the year before?
Matt Hunckler 18:22
I think Vegas was a year or two after actually.
Jay Clouse 18:25
Matt Hunckler 18:26
Jay Clouse 18:28
Well, Vegas was 2006 or 2014.
Matt Hunckler 18:30
Yeah, so I’m talking 2011.
Jay Clouse 18:33
Oh, okay. So they must have gone back to Kansas City, and I wasn’t there then.
Matt Hunckler 18:36
Yeah, they did. I didn’t go to that one in Kansas City later times. But I did go to Vegas after that. So I went to Vegas in 2014. I was definitely there at the Gold Spike and had had a blast. I always enjoy going to Vegas and seeing what Tony’s doing down there. And I know there’s been varying stages of that project. But it was one of those things where, you know, 2011 I saw this happening. I was talking to these people all over the world, we’re experiencing the same pain point. But I could tell it was still kind of early. Right? I had seen it happen in the non-toxic space and how that exploded, you know, like four years later. Same sort of thing with Powderkeg, it’s a timing thing. And timing is everything. And so I’ve stayed close to it. Obviously, I’ve been working in this space for a long time. But when I saw the opportunity with talent, and I saw how much money these scaling tech companies are throwing at the problem, and how inefficient it is for them, while at the same time, I saw things that were happening naturally in the community that, that I was helping to organize and run, and seeing how these communities actually work. And it’s not like job boards. It’s not like LinkedIn, it’s not like AngelList. They’re you trying to use all of these tools, but ultimately, there’s not the right solution for how these communities operate. And that was the big, okay, this is this is happening, people are trying to make it happen with things like Slack and, and spreadsheet cheats. But there’s got, classic, got to be a better way. And that’s when we started testing some things. We signed on 40 beta customers, paying beta customers before we even started raising money. But you know, it was one of those things where it’s like, okay, we’re going to need some capital to really give this a go. That’s turned out to be a good–so far, knock on wood. You know, we’ve got a, we’re back to close to profitability again. We’ll probably be looking at doing another round here in 2020.
Jay Clouse 20:27
Functionally, what does that look like? What does the Powderkeg approach to connecting companies to talent look like? And how is it different than the spreadsheets or the Slack or the AngelList that they were doing before?
Matt Hunckler 20:39
I could probably talk for four hours on this, so I’ll try to be brief. But the, you know how these communities work, you both live in them. You both probably on a routine basis have people hit you up and say hey, I’m not saying I like absolutely need a job right now. But if you hear of anything, particularly if it’s like with IoT, or I’m also kind of enjoying In blockchain, but I really don’t want to leave the automotive space because I really like, you know, it can be some weird preferences stuff like that, and usually is, or is completely unknown, and you say well what kind of company you’re looking to connect with? And then they say, I don’t really know. And so then you got to help them think through what kind of company they’re actually looking for. This happens all the time. And I’m not saying it’s only happening in the middle of the country, in these, you know, Rise of the Rest or Powderkeg type cities that are kind of on the verge right now. But that’s where talent is really moving, particularly that mid to senior level talent that is so hard to find in these communities. So particularly when people are like moving into a new town, this is when this happens or moving back from the coasts into the middle of the country. It all happens through personal relationships, and personal relationships. vouching for individuals vouching for talent is how talent is getting hired. So in Powderkeg today, anyone can go and sign up. It’s free to be a candidate on Powderkeg, you can sign up at Powderkeg.com/jobs. You go in, you tell us a little bit about yourself, we even help sort of like stack rank what’s most important to you in terms of what kind of culture you’re trying to find. And ultimately, we’re going to start matching companies to you. And it’s just opportunities. So there’s no high pressure sales, there’s no hey, apply for this job. It’s just does this company look interesting to you? Yes, no. If you say yes, we say, Great, and we’ll send that company your information. But you also have to keep in mind that these communities are small, at least in comparison to Silicon Valley or New York City. So a lot of the times we’re anonymizing people’s information, semi-anonymizing it. That has the added benefit of reducing bias from the hiring decisions as well. So you know it’s a full stack developer with seven to ten years of experience, and they work in this tech stack. And here are some of the projects that they’ve completed while also anonymizing what companies they were for, but you get an idea of kind of what kinds of companies they’re working for. And then what kind of culture they’re looking to join. And that’s something that right now doesn’t, doesn’t really exist in these sort of middle of the country communities. So the company gets the opportunity then to say, Yes, I want to connect with this candidate, and then they’re instantly connected to a decision maker, as opposed to going through a job board are going to the careers page, taking a technical assessment. Now, some of those things might need to happen down the road, but everything just starts with a conversation. And that’s where we’re really looking to find those people who are sort of mid to senior in their career, make sure they’re getting connected to the right person so that they know whether or not this is a company that actually like to work for.
Jay Clouse 23:38
What types of talent gaps do you see in the market as far as like pure availability? Or is it just inefficiency that’s the problem?
Matt Hunckler 23:47
Oh, there’s talent gaps for sure. I see talent gaps at every stage. And it is definitely not a one thing more than another. But the thing that, that startups and high growth technology companies are hurting the most for is that mid to senior level talent. The problem is, those aren’t gonna just like create themselves. There’s a finite number of people who have been doing account executive work or doing software development or doing customer success for five to ten years. So there are a lot of other products that are working on, you know, on-ramping people from coding academies and getting people from even certificates that universities are spinning up specifically to get people into tech jobs. And we see some opportunities to make that even more efficient down the road. But right now, we’re really focused on that sort of like mid to senior level because that is the one that, far and away, when you look at the data across everything that we’ve done with our own surveys in all these markets, that is the, the number one pain point in where they’re hurting the most.
Eric Hornung 24:45
You mentioned early on that Powderkeg almost had to create a movement–or Verge or whatever it was called back then–almost had to create a movement. And then you said that you were a little too early for this non-toxic play. Do you feel like Powderkeg is still a little early, or do you feel like we’re in the middle of a movement here outside of the coasts?
Matt Hunckler 25:07
I think we’re in the middle of the movement right now. I mean, we’re, we are in the middle of a movement right now. You look at the headlines just last year, there are at least three or four dozen major media outlets that have headlines specifically about what’s popping here. And usually media is about a year or two late too, so, so I think we’re really–I don’t want to say in the middle of it, but we’re definitely not pre-movement at this point. I don’t know about in the middle, because that implies that maybe like, this is the bubble. I think that we’re just starting to see the beginning of the movement right now. You look at the cost, living costs–and I know I’m preaching the choir here–but you look at living costs in the Valley and in New York, and like New York City, it’s like rent income ratio, I think is like 53%, meaning you’re spending 53% of your income on rent. Here in Indianapolis, it’s 13%, and you’re still making six figures if you’re working at a high growth tech company. Maybe you’re making less than that if you’re at a startup, but you’re also getting great equity usually, and the lifestyle is just incredible. And you know, I say Indianapolis, insert city here: Columbus, Cincinnati, Nashville, Chattanooga. Aall of these markets, it’s the same sort of thing. And there’s various, varying levels of maturity, right? Like Indianapolis is, I would say, maybe on the other side of the median of maturity in terms of these tech hubs because we’ve had the exit of Aprimo for half a billion dollars, I don’t know, seven, eight years ago; Exact Target with a $2.6 billion exit to Salesforce;you know, Interactive Intelligence was a $1.2 billion exit to Genesis. You know, all these companies have kept headquarters in Indianapolis. You know, Angie’s List acquired by Home Advisor, and, you know, they’re on the same floor as our building downtown. There’s a lot happening here. And that’s not the case in every single, you know, middle of the country metro. That said, you know, having kind of experienced this case study and dropping in on other communities, I feel like I, I understand kind of like the life cycle and like where it’s going. I’m not saying I know everything, which is why I try to talk to like, at least five people a day to give me perspective and tell me how much my product sucks or doesn’t suck or, or whatever. Because I know I don’t know everything, and I’m trying to, by listening to a podcast like upside, keep my finger on the pulse of what’s going on in all these other communities.
Jay Clouse 27:30
When you guys are matching talent to companies, are you typically finding that you’re matching them within their own local ecosystem, or do you see a lot of cross pollination of ecosystems?
Matt Hunckler 27:41
This is really interesting. So I mentioned we have over 10,000 members, I would call those like, in the recruiting, job recruitment jobs and recruitment industry, you’d call those passive candidates, meaning like, most of them are not actively seeking a new job. We’ve got at any given time between five hundred and a thousand active of our community. These are people who have raised their hand and said, I’m interested in seeing what else is going on. And that’s just where we are right now. That’ll change month to month, especially as we continue to grow the community. But the interesting thing is more than half of the active candidates, at least last I checked, more than half had more than one metro selected in their preference, meaning it’s not just hometown. And when you have conversations with these people, it’s very much, Hey, as long as I’m half days drive from home, you know from mom and dad, so we can drop the kids off for the weekend and you know, do a getaway or be home for the holidays, or they can come down for the holidays. That, that’s sort of like four to six hours from home base. And I’m talking driving, right, because most people don’t have private jets yet. But I do think it is that sort of like sweet spot of six hour drive or less from their, their home base. And then of course you’ve got like the really hot hubs that are like Nashville and Denver that just have an amazing quality, particularly amazing quality of life because of the geography or because of a particular industry. You know, if you’re a music technology company or healthcare technology company, you probably want to at least check out Nashville, like visit it for sure. If you’re into sort of like the outdoorsy vibe and consumer tech products, Boulder and Denver have a ton going on out there. So it is very much a preferences thing. But back to your original question, as I digress, yes, people are definitely open to checking out other markets.
Jay Clouse 29:34
As you probably know, podcast analytics are not great. We have a hunch that a large proportion of our audience anecdotally seemed to be in the Valley themselves.
Matt Hunckler 29:45
Jay Clouse 29:46
What, how does that compare to what you’re seeing with your members at Powderkeg?
Matt Hunckler 29:50
Ah, it’s interesting. We definitely have a subset of our community that are in the Valley. But as I mentioned, the majority of our community today have at least engaged in person at one of our events, and all of them, you know, the dozen or so markets that we’re in right now or connected, you know, with us at a Rise of the Rest event, you know, at the, I don’t know, at this point, five dozen different, different…Oh no, not five dozen, probably 20 or so communities that I’ve, that I’ve been in with Rise of the Rest. So I wouldn’t say the majority is. But the interesting thing is we host on SoundCloud, so Powderkeg Igniting Startups, that podcast that’s been going for a couple years now. Does give us where are people streaming from. Now, it’s, I think that’s only people who are streaming from SoundCloud itself. But there’s a decent portion of our audience that is doing that. And our number one city is San Francisco, Bay Area, even higher than Indianapolis, which is like our home base. So I would corroborate it from that standpoint, that there is an audience for the media that’s being created and showcasing these companies in the middle of the country.
Jay Clouse 30:56
I’m gonna put you on the spot here. Give me a rundown of what you’re saying. In terms of ecosystem maturity when it comes to startups? How would you rack and stack some of these cities that you’re in or are at least familiar with?
Matt Hunckler 31:10
Oh, don’t make me pick my children. Pick, pick favorites. You know, it depends on what…The thing that’s really hard, and I’m not just trying to dodge the question, it really depends on what you’re talking about. Maturity in what way? Right, so let me give you an example. Cincinnati is an amazing tech community. They have an amazing, so the I would say one of the key organizations is Centrafuse, which is, was created by the big companies or big Cos as Wendy Lee from TechStars and formerly Centrafuse calls them, Procter and Gamble, Kroger, very engaged and literally they started Centrafuse. So they are more mature than say an Indianapolis, in my opinion, about helping connect big co’s with startups and getting big co’s engaged in the tech ecosystem. Now that’s not to say that Lily and Cummins don’t have great digital accelerator programs and that they don’t come to our events, because they absolutely do. But in terms of maturity of like actually engaging at the organizational level, I would say Cinci is ahead of us there. Cinci also has like, I mean, this is exaggerating, but I feel like a dozen plus accelerators in their community like they have so many freakin accelerators. Indianapolis just got its first accelerator like two years ago. Now, that said, there hasn’t been a $2.6 billion exit in Cincinnati. In fact, I think there’s only been one, and I’m blanking on what company it is. But I think similar, similar to Columbus, Indianapolis has had some bigger exits than, say Cincinnati. So in that sense, it’s more mature because there’s more capital back in the ecosystem to invest locally in startups. And that’s really important to the flywheel of ecosystem development. You’ve got to have local people investing in local companies, then getting return and reinvesting back into the community. And then at the same time bringing more people off the sidelines, meaning people who made their money in manufacturing and automotive and all these like traditional rustbelt type of industries, they see their friends making money in tech, and now they see it’s safe. Oh, you know, my buddy just made 20x on Interactive Intelligence. I got, I don’t want to miss the next one. Then they’ll open up their, a little bit more of that asset class in their portfolio. Part of the, it’s great that there are coastal companies now also very much looking at investing in the middle of the country. This was the first year that venture capital investment grew faster outside of Silicon Valley than inside of Silicon Valley, at least according to I think it was a either Pitchbook or NBCA report I saw recently. But when those companies exit the majority, that capital is going to go back to the coasts, too. So, there will be obviously wealth generation in these communities in the middle of the country, but a lot of the, the rewards and the proceeds are going to go back to the coasts. Now, the good news is they’ll probably just reinvest back into the middle of the country. We’re already seeing that happen where, you know, a venture fund who got in with Exact Target, they’re coming back for more on the next wave of companies. So to your initial question of stages of growth, it really depends on if you’re just looking at investment dollars, and like the funding ecosystem; or if you’re talking about talent, because some ecosystems do a great job of engaging, you know, higher education, and getting coding academies; or you’re talking about getting customers, so like, how good are these ecosystems about bridging the gap between tech startups and like big companies who might buy from them and fund through revenue? There’s just various, various aspects that I would, that I would have to look at to kind of stack rank them.
Eric Hornung 34:48
Let’s look at it a different way real quick.
Matt Hunckler 34:50
Eric Hornung 34:50
If you were in charge of planning the next Rise of the Rest tour…
Matt Hunckler 34:54
Eric Hornung 34:55
…And let’s say you got a private jet, so you could fly from places, didn’t have to be bus routes, what would be the three cities that you haven’t been to that you’re most curious about?
Matt Hunckler 35:03
Oh, gosh, that I haven’t been to? I’ve been to a lot of cities.
Jay Clouse 35:07
Or haven’t spent much time in.
Matt Hunckler 35:09
Hmm. So I think I would, I think I would go back to–and I do spend a decent amount of time in DC, but I’m very interested to go back post Amazon HQ2 and see how that’s affecting the ecosystem there, because they’ve got an amazing ecosystem–that’s where Rise of the Rest is based, as well. But they’ve got an amazing ecosystem. 1776 was a big part of that, that incubator and accelerator space. And then obviously, serial entrepreneurs who are up there that are starting their second, third, fourth company, a lot of which, you know, fell from the AOL tree as well. So that would be one of them. Detroit is one that I haven’t been to recently. I really, I really liked Detroit. I really like Jacob at Detroit Venture Partners. When I run into him at conferences, every time I have a conversation with him. I’m like, man, why have I not been to Detroit lately? And so, I think that that is a really cool story, too, have just a city reinventing its identity. That would be one of them. I really like Dallas right now, too. And now, I have been there on a number of different tours, so I’ve seen it at varying stages, but it seems like that one is just really heating up and about to pop as well.
Jay Clouse 36:21
It’s like you got a start up Almanac and you’re just sticking to the D section right now.
Matt Hunckler 36:24
Yeah, that’s interesting. I didn’t even realize that. Maybe I’m, yeah, we got to go to Des Moines, as well. Denver.
Eric Hornung 36:32
Both the Dakotas.
Matt Hunckler 36:33
Dakotas for sure. I have a farm in the Dakotas. So I would like to go see Grand Forks. I know some of the folks there that I’ve connected with various conferences. My parents spend a lot of time in the Dakotas, so, that would be an interesting one, too.
Jay Clouse 36:47
You mentioned our friends at Centrafuse.
Matt Hunckler 36:50
Jay Clouse 36:50
What other unique organizations exist in some of the cities you visited that are taking novel approaches to growing their ecosystems?
Matt Hunckler 36:59
Well I mean, this is not a mini one. But I really love what TechStars has done, you know, just on a global scale. And I know you’ve talked to a number of people from TechStars, or people who have participated in TechStars in some way, shape or form. So I think that what they’re doing right now, and Chris Haile in particular, who I think was one of our first episodes of the Powderkeg Igniting Startups podcast . He was a co founder of MapQuest, one of the key people in the Raleigh Durham Tech triangle, he’s now leading a lot of their innovation that they’re doing in communities. And so, I think that their approach, which of course has all the Brad Feldian wisdom behind it, of building startup communities, which I think there’s another version of that book coming out soon, which I’m eager to read. So I really like what they’re doing. Obviously, they always start with listening first, which is just a really good…I admire them in a lot of ways. In terms of unique as, as for like a per geography, it’s really hard to pick just one. I really like what Launch Tennessee has done in the state of Tennessee as a whole. I think what they have done to unite the entire state has been very impressive. You know, they’re headquartered in Nashville, which is what I would argue is probably the most mature tech market. So I’ll at least answer your question, Jay, and I’m not entirely dodging way I think Nashville is mature and most categories as compared to like a Chattanooga or Knoxville. But each community has a ton going on. Chattanooga is one of the first Google Fiber cities. They got amazing companies like Workhound that have grown out of there, which I know they were on upside recently. But launch Tennessee when we came to them and said, Hey, we want to do a Nashville Tech census. So the tech census is that sort of national survey we’ve been running in a number of markets to really get a lot more data, like, what’s actually going on in these communities in between the coasts and specifically what’s going on in the tech communities, and how are these communities emerging? And we went to Nashville and said, we want to do this in Nashville. And they said, We have to do the entire state or nothing. And no one else had said that in any of those states that we’d been to. None of the other organizations we had worked with, including Tech Stars, said we need to do a statewide, it needs to be statewide. And so I thought that that was very interesting. And the fact that they’ve raised their own venture fund to co-invest alongside, I think they do a good job of that. A lot of other cities and states do that but at varying levels of success. I think Elevate Ventures does that well here in Indianapolis and in Indiana, as well. But Launch Tennessee is one that I thought was, was really solid. And with a benefit of that is, it was a huge success. We had more people participate in Tennessee than any of the other states when we did it last year because it was a statewide census. And people drove from all over the state to come to our launch event. When we launched the tech census in Nashville, even though it was in Nashville, you know, people came from Chattanooga, they came from Knoxville, they came from all these different tech hubs around the state of Tennessee. And now that’s how we do tech censuses. They’re always statewide, you know, from, from then on. So all of our best ideas have definitely come from the community. We just try to do our best to listen, even though we don’t always do that 100% well.
Matt Hunckler 37:02
One last selfish question from me here. Given that you’ve stepped foot in and learn so much about so many different communities in the middle of the country, I have to think you’ve considered raising your own fund. Why haven’t you?
Matt Hunckler 40:22
That’s a good question. And I’ve definitely had a lot of people encouraged me to do that over the years. I haven’t written it off as a thing I will never do. But it doesn’t feel like that season for me right now. I want to be building things. And that’s not to say that like building a portfolio or building a fund and a network of LPs is not building something. It’s just a different kind of something. And the thing that I get the most enjoyment out of right now, and I realized that’s a very privileged thing to be able to say, is something a little bit closer to the human level. And that is creating community, creating the ability for people to move into jobs that they love and are truly going to thrive and be able to grow with. And may not be for the rest of their life, and if the trends continue to go the way they will, it probably won’t be the rest of their life. So we want to be that community where people can come back to and continue to be a part of it. So it’s not because I don’t think there’s an opportunity there. There’s clearly an opportunity there. Drive Capital is one of the first ones to do it on a big kind of national stage. Rise of the Rest, of course, is doing that, that sort of like seed in series ABC stage, literally getting on a bus and getting to, getting to the cities. And so I’d rather partner with those people who have a passion for that, at least in the current, my current season of life, and build something that is a tech product and that is a community powered marketplace.
Jay Clouse 41:47
Being in the midst of this movement, where more attention and more traction is happening in the middle of the country, what do you feel like is still missing, besides the obvious answer of connecting candidates to jobs?
Matt Hunckler 42:00
Yeah, so I mean, the product we actually took to market originally with Powderkeg, when we launched Powderkeg was sort of like an Iron Man suit for founders so that the men and women starting amazing tech companies in the middle of the country could have more resources, more tools. And, of course, you know, it’s a lot easier to identify this in other startups than your own. But you know, quickly we learned the lesson that it’s much easier to focus on solving one problem than all of them. So our, our Iron Man suit originally helped solve connecting to capital, connecting to talent, connecting to customers. And so we still will help our customers connect to capital when they’re looking to raise that next round, we’ll still help them connect to customers just as part of customer service. But the product that we’re building is specifically focused on talent. So that’s a roundabout way of saying, I still think connection to capital, still 80% of venture capital goes in just three states, California, Massachusetts, and New York, leaving the rest of the country fighting over the remaining fifth of the funds. Unfortunately, that, that number has gone down, like gone the wrong direction, in my opinion, because it used to be 75%. Now it’s 80% goes to just those three states. I think that was a couple of mega deals in those states, but still. And then at the same time, how do we get more customers aware of the innovation that’s happening in these hubs? There is so much happening, and you do an awesome job showcasing and highlighting on your show. But you can’t be everywhere all the time. And as a founder in the middle of the country, a tool to help them or help these bigger companies, bigger purchasers, bigger, bigger customers discover these products and companies in the middle of the country, I think there’s a big opportunity there, as well.
Eric Hornung 43:40
Matt, this has been awesome. If people want to find out more about you or Powderkeg, where should they go?
Matt Hunckler 43:46
I am just Hunckler, @Hunckler on…that’s my last name, it’s not a nickname. @Hunckler on social media. That’s H-U-N-C-K-L-E-R. Just a mashup of consonants in the middle of my last name. And then we’re @Powderkeg on most platforms except for Twitter. So @Powderkeg on Instagram, @Powderkeg on Facebook, Instagram, we’re @Powderkegco, you can find us there. Powderkeg.com. And then of course on our podcast as well, which you can find at Powderkeg.com/iTunes.
Jay Clouse 44:20
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Eric Hornung 44:59
All right, Jay. We just spoke with Matt from Powderkeg. And you know, a lot of that conversation was around this idea of a movement that is brewing. And a few weeks ago, you and I were talking about this in terms of what does a movement look like from the inside? And is it real this time? And it feels like this whole outside Silicon Valley, no coast type movement has happened before? Maybe it hasn’t. I really don’t know, I want to know your take on this whole concept of a movement in context of what we just talked about with Matt.
Jay Clouse 45:33
I don’t know about the word movement, I want to call it a trend. And maybe it’s a trend towards a new normal, and that’s what a movement is. But Matt’s definitely an OG in the space of being a proponent for entrepreneurship in different areas of the country. And it was good to get validation from someone that’s not two of us and who is not an investor with a thesis on the Midwest to say, I’ve been looking at this for years, and I’ve been ahead of things things in the past and missed them because I was too far ahead of them, but this feels like we’re in something. And I like that. I think he said you wouldn’t necessarily call it the beginning or the middle, he wouldn’t say, we’re not in the middle of movement. So I’m going to say, in the midst. We’re in the midst of a new trend of people building valuable companies for real for real in different areas of the country that are worth paying attention to. And that’s exactly what Powderkeg is doing and serving them in different ways. And exactly what we’re doing here on the podcast.
Eric Hornung 46:29
You can tell you listen to the podcast, because he said, Powderkeg was explosive. And I just like man, he gets us, you know, he loves a good pun, too. Good play on words.
Jay Clouse 46:41
I enjoyed basically asked him a lot of the questions that I would ask and have asked a lot of other people who are aligned to this topic usually off the mics. But on the mics, I got to say, rack ’em and stack ’em. Let us know how you would rank these, how you’d rank these ecosystems? What cities are you interested in visiting? Really enjoyed asking those questions, and got some unique answers. Haven’t heard a lot about DC or Dallas. We haven’t spent much time there. Haven’t spent much time in Detroit. So maybe a good time for us to visit the D’s.
Eric Hornung 47:07
I think we can throw some D’ on this podcast.
Jay Clouse 47:11
Whoa, good one. That’s good. That’s good.
Eric Hornung 47:14
But listeners if you are listening, and you have a company in DC, a company in Detroit, or a company in Dallas who you’d want to come on upside, you should shoot us a note at firstname.lastname@example.org. We’re definitely interested in those cities now more than ever.
Jay Clouse 47:30
Eric, Matt has gone the fundraising route to build Powderkeg out of just a media company and into this talent connection company. What are your thoughts on fundraising with a media company? Here we are with a media company. Should we raise like a million dollars?
Eric Hornung 47:45
Well, we’ll leave upside out of it for a second. But if we talk about Powderkeg, I think the idea that we’ve talked about an upside which is, first, gain distribution, then come up with an idea that you can use that distribution to scale, makes a lot of sense. I think that he identified a gap, and it’s a real gap outside the coasts. And I really like the idea of it not always being active, this idea of it being almost passive as well, because when I was in the midst of a job search over the last 18 months or so, I sent my information to a lot of companies and found them specifically. But it would have been really nice to have kind of a network that I could have just dropped in, Here’s generally what I’m interested in and looking for, and then they do the vetting and find me and kind of figure everything out and say, Does this seem interesting to you? I like the ‘Does this seem interesting to you?’ kind of line. So it’s a tech enabled recruiter that seems more passive than active.
Jay Clouse 48:45
I like making marketplaces more efficient. I like intelligent matching of people to opportunities. As we heard in the interview, there’s still some strides to be made in terms of filling actual talent gaps, the availability of talent. We got to get a company on here to talk about how they’re equipping people with more skills to play in this space. But the harder the harder nut to crack, and what’s just going to take some time, is this executive talent that just doesn’t materialize. You don’t train to become an experienced startup founder or startup employee. It just happens by experience. So interested to see where the next big billion dollar exit is in the middle of the country here, what that spawns off, and what that turns into. But that’s the, that’s the need that we keep hearing from founders and investors alike.
Eric Hornung 49:31
A lot of times, we think that this is just a problem that’s unique to us. And we look at Silicon Valley today and we say, or New York or Boston, and we say, Look, they have so much of this type of talent. But I think we’re a little short sighted in that we’re forgetting during that run following the .com. bust, and even in the .com bust, there was this need to put, I think the phrase at the time was, adults in businesses. So Larry and Sergey actually had a CEO come in for them. And I think that that kind of upper level senior management was always something that was kind of getting plugged in to startup companies and was something that was rare and needed and usually was coming from, you know, big fortune 500 companies back then, because no one had scaled businesses that fast as well. So I think it’s just part of the market cycle. And as we have more of these companies that do well and scale, that flywheel will feel like a distant memory in five, ten, fifteen, twenty years.
Jay Clouse 50:30
All right, guys, we’d love to hear your thoughts on this episode in this conversation with Matt Hunckler of Powderkeg. You can tweet at us @upsidefm or at Matt @Powderkegco and @Hunckler with the mishmash of consonants in the middle of his name. Would love to hear your thoughts about the movement. Are we in the middle of it? Are we in the midst of it? Are we at the very beginnings of it? Let us know. You can email us also at email@example.com and we’ll talk to you next week.
Debrief begins: 45:00
Matt Hunckler is the founder and CEO of Powderkeg.
Powderkeg is a platform connecting tech talent in the middle of the country to the Midwest companies they’re searching for. Founded in 2017 after emerging from Verge, one of Matt’s earlier companies, Powderkeg has more than 10,000 active members, all with the goal of staying connected to startup communities outside of Silicon Valley.
An Orr Fellow from Indiana University, Matt has had a hand in a number of startups. He’s been passionate about Midwestern startup communities for a while, and in today’s interview, he shares his ideas on the current trends happening outside the Valley.
- Ad: Finding experienced employees for your new business with Integrity Power Search (4:53)
- History of Matt and Powderkeg (9:37)
- Decision to rebrand Verge to Powderkeg (13:30)
- Powderkeg membership (14:56)
- Fundraising in the middle of the country (16:14)
- Powderkeg approach to connecting companies and talent (20:27)
- Talent gaps (23:38)
- Current Midwest movement (24:45)
- Changing ecosystems through Powderkeg (27:30)
- Cross-section of different startup cities (30:56)
- Novel approaches to growing startup scenes (36:50)
- Why not start your own fund? (40:22)
- What’s missing from the Midwest (41:47)
Learn more about Powderkeg: https://powderkeg.com/
Follow Mike on Twitter: https://twitter.com/Hunckler
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This episode is sponsored by Integrity Power Search, the #1 full stack high growth startup recruiting firm between the coasts. They partner with venture capitalists, private equity groups and CEOs to build amazing teams for the world’s most disrupting companies.
Learn more about or get in touch with Integrity Power Search: https://upside.fm/integrity