I recently talked to Greg Larkin on the Etch Podcast. He describes himself as someone who maximises innovation ROI within large companies and is the author of the international bestseller, This Might Get Me Fired. He's launched products with Google, Bloomberg, Uber and across the Fortune 500, which have generated an average return of 22x. Greg is on a mission to empower entrepreneurs to do their most transformative work, and is the founder of Punks and Pinstripes, a global community of entrepreneurs, intrapreneurs and punks who support and empower each other.
In 2006, Greg was the first person to publicly predict the subprime financial crisis. That prediction propelled him and his startup to an $18 million acquisition. Greg has lived all over the world, but his home is in Brooklyn, where he grew up.
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Ross Chapman: Greg, welcome to the Etch Podcast. Fantastic to have you here. Can you share with this audience what you're all about?
Greg Larkin: I empower intrapreneurs, inside some of the biggest companies in the world to maximise return on investment.
RC: Well, it's a great pleasure to have you here. Greg, can you tell us what the response has been after you published your book, This Might Get Me Fired, and what kind of people have been reading it?
GL: The response has been bigger than I thought, and from sources that I didn't expect. The reason I initially wrote it was because I had to live my life as an intrapreneur. And not just in the Fortune 500, but inside of Wall Street, which is in many respects, some of the most risk averse in fertile soil for an entrepreneur to thrive. And I've had a few successes inside of that environment. But more than anything, I felt very alone.
I wrote the book, because I knew that there were other people who felt like me, and I wanted to just put it out there that “you are not alone”. In fact, if you were able to join together, you could be empowered in ways that might seem unimaginable right now. What has surprised me in the two years that have ensued is that the greatest feedback and gravitational pull for the book was not with the punks, who are on the ground, building innovation, building entrepreneurial products, but rather, from the board. And from the C suite of the companies. the very people who I assumed would be offended by the book, it turns out, they were not offended at all. They were grateful for the fact that someone finally had the audacity to say it out loud, and to hold them to account and that they could hold up this book to the rest of the executive leadership team and the rest of their board and say, “guys read this, don't not read it”. Like when we have our next board meeting, don't show up until you have read this book. And that's really not something I expected. I accept that I expected a bunch of class action lawsuits from both people. And instead, they've kind of embraced me as a breath of fresh air. And they've brought me into their organisations to transform them. I say it to their faces, without any sugarcoating about how hard this is and how hard they have to work for for real entrepreneurial transformation to actually come to life.
RC: That's something I really enjoyed about your point of view. It's not a top down operation. It's about the intrapreneurs. gathering together and being able through the methods that you describe, actually deliver upon the promise of innovation.
Now, you cut your teeth in financial services, which is to my mind, one of the areas most in need of disruption. The book is really a wake up call on how a lot of these sized organisations, large enterprise businesses need to wake up and they've been treating innovation in the wrong way.
GL: Like, for humanity, to be able to survive bad stuff and come out the other side, healthcare needs to be radically disrupted.
And it is for that reason that during this pandemic, you have seen groups of fewer than 10 people in under four weeks go from whiteboard and ask “what is a ventilator” to FDA approval, it's on the market and it costs $3,000 a unit, while the incumbent solution cost $30,000. A unit like that in the medical device industry will never be the same going forward. They will never be able to sell a ventilator for $30,000 for the remainder of human history. So this idea that you have to start fast and give yourself permission to fail is complete bullshit. There's a huge difference between a company that innovates with urgency and a company that innovates with interest. And the companies that are not innovating with urgency are going extinct, like that is the single biggest sign that they will not be able to survive the next wave of evolution, in the same way that you do not see cro-magnon humans running around the Earth anymore. This idea that someday you might get around to it is so self soothing, and complacent in the face of very real and present danger of how the disruption economy, just annihilates industries and organisations that coddle that belief and allow themselves to cling to it.
RC: Innovation just isn't the oxygen that these large enterprise businesses are breathing, it's treated like a hobby, something to do in your 20% time, something that you may be able to do around your business as usual. And that's just not reality, is it?
GL: It's not reality. And I also think, you know, and I say it in the book; I'll never have a reason to stop saying it. Because it's the hardest thing for larger organisations to embrace. If you innovate by pitching ideas, rather than outcomes, you will fail, you have to pitch outcomes. No one risks anything when they say no to an idea. In fact, in many organisations, if someone says no to an idea they make themselves seem like they are uniquely capable of seeing into the future and averting a certain disaster. There is an incentive to say no to an idea, when you're in a company that is able to give people permission to present an outcome, you make everything a little bit easier, because they're showing up and they're saying, I'm not asking you if this can be built, it's built and is in the market and is solving a real problem. It is moving fast, there is traction, I'm asking you to invest in it. And if you don't want to invest in it, then let me know. So I can move on with my life and build it somewhere else.
As soon as you have an organisation where you're pitching outcomes over ideas, it completely transforms the balance of power around entrepreneurship around building a new venture
As soon as you have an organisation where you are pitching outcomes over ideas, it completely transforms the balance of power around entrepreneurship around building a new venture. And also in those environments, when people continue to say no to an outcome, what tends to happen is they let the entrepreneurs leave.
In my domain, which is big finance, which is where I kind of grew up in the entrepreneur Exodus, in big finance, it is the quietest, biggest storm that no one is talking about. But this idea of disruption 1.0, which is like Mark Zuckerberg, in his dorm room in Harvard, wearing a black hoodie, doing tonnes of drugs, building out a thing so he can like rate women on campus and build a consensus quickly: It's such bullshit that is completely the early 2000s version of where disruption has come from where the next wave of disruption is a 50 year old C suite executive from a major bank or a major consulting firm that just had enough that saw that their customers have needs that are unmet by their current banks, and that they could do it faster, better, smarter, cheaper on the outside, starting from scratch.
That journey from pinstripe to punk is the biggest driving force of the next wave of disruption is because of that driving force. I actually think in 6, 7 or 8 years from now, somebody is going to emerge in finance and someone is going to emerge in management consulting. Where you're starting to talk about McKinsey, BCG, maybe even PwC, Deloitte, you're starting to talk about Goldman Sachs, Morgan Stanley, Citigroup, Bank of America, Barclays, the way we talk about Sears. These institutions that are just these different relics of another era of retail, and you maybe you didn't see that coming when somebody like Amazon first emerged, or when someone like Google first emerged, but you can certainly fast forward to today. And I think, literally in real time that the entrepreneur exodus is going to disrupt management, consulting, insurance, big banking, in the same way that Amazon did to retail the same way that Airbnb did to hotels.
The time that you can always monitor or certainly the time that I can monitor this is when bonuses are paid out between February and March at the big banks. It's so interesting. This year, in particular, they've been slowly releasing little niblets of news that bonuses this year won't be what they have been in the past, but you're gonna start to see that the technologists within banks, and banks will pay a technologist, you can name your price, because no actual technological entrepreneur ever wants to work in a bank, you can say, “I am worth $750,000 base salary”. And they'll be like, “you know what, let's make it $800,000”. So monitor, because within the world of big finance, I have a reputation of helping people who want to leave launch startups and finding co founders and investors.
My inbox, even with the threat that bonuses are going to be lower is like, every time there's that kind of announcement from say, e.g. JP Morgan, I will inevitably get 30 inbound emails from JP Morgan from people like, “Hey, I have a CTO on this product and JP Morgan, I think I'm ready to leave”. I heard you're somebody who can help. That's not going away. And when you kind of zoom out and you see all right, well, how much is that happening at scale? We look at all of the startups marched by all of the entrepreneur exodus. What are they doing? How much are they eating into market share of their former employers? How scary could these things be? Once they get huge, you start to see some mega trends that are like terrifying. There's been an eightfold increase of banking executives who quit a bank and launch a startup over six in 2015. That was 4% of bank executives who left the bank went on for larger startup, now it's 28%.
RC: That's just fascinating, isn't it? Why do you think that is? What is it about the C suite now, which is changing their behaviour?
GL: I think there's a few drivers behind it. One is what I would call, what I experienced, which is Die On The Vine syndrome. Die On The Vine syndrome is when you build a product inside of a large financial institution, and it's theirs, you have product market fit, it works. If the technology is stable, your users are gravitating toward it, people are spending money on it. And then for no good reason, just political bullshit, or an unwillingness to solve some sort of critical components of technical debt so it can integrate into the main architecture of the bank, it's not right for us so we'll switch it off.
Banks are very reluctant to do a spin off. All of the architecture and the scaffolding inside of an institution is built for old banking services. There's this mythology that banks are technologically evolved and they're not. They might have a lab which is like a blockchain or AI Center of Excellence, but it's right next door to a fax machine and a PowerPoint deck that is responsible for $100 billion of throughput a day. So I think when you as a technologist as an entrepreneur go through multiple product launches, which achieve product market fit, and then are killed for no good reason, it's a tough thing to go through. There's this thing that dawns on you after a while, which is: If I'm capable of achieving product market fit, why am I here? Why am I squandering?
That's the most invaluable resource in the modern economy. I think that's the same thing that prompted Mike Bloomberg to quit his job or when he left Salomon Brothers in the 80s to build Bloomberg LP. That was the first wave of the entrepreneur exodus in finance. The difference now is what used to be an impenetrable defence. It was so big and large scale in banking, that it just seemed like it was impossible to launch a startup that could ever hope to go head to head.
You now look around and you have a bank like Deutsche Bank, where it's not so big, it's just bloated. None of their systems are speaking to each other. None of their people are speaking to each other. It's a completely dysfunctional mess of technology and databases and political factions that hate each other. 15 years ago, I wouldn't have expected that. Deutsche Bank for the past five years is down 68%. The S&P 500 is up 75%. It's not an unreachable mode. It's a pathetic excuse for intransigence. It's a pathetic excuse of what might have been considered scale is now just fat. It's ineptitude. What you're now seeing is that the intrapreneurs that struggle in an environment like that have a very real understanding of who the customer is, and how they can serve that customer better and smarter than their company can.
The idea that you can go out and be disruptive was unthinkable when I started out in finance. Now, it's not just thinkable. It's completely realistic that the investors that might have said “I'm not paying, I'm not betting on someone disrupting Goldman Sachs or Deutsche Bank” - they are now saying “Where have you been all my life?”
I think there's an investor appetite that wasn't there before. I think there's also an investor realisation that it's a bad place to park your investment dollars. You just have this legion of entrepreneurs on the inside that have such an acute understanding of how it can be better. And on the outside, they can kind of all come together and build something disruptive and find one another, and be emboldened to try. I don't think all of them will fail. The ones that do succeed - that's the next Google or Amazon. It's not the direct to consumer revolution. In my view, that is behind us now. It's going to be very hard for someone to emerge and disrupt Airbnb or Google, but the direct to enterprise revolution is just beginning.
RC: And that's the next wave of disruption. Bring it on! Greg, I got to know you through seeing that quote, I think Stephen Gates shared it on Twitter. And that quote, is a chapter title in the book, that the innovation that's necessary, is never authorised. And what I took from that as a consultant and you in that area too, is that being external to an organisation, we have a power that we can use, but also there's still a relevance to having external consultants.
GL: Yes. If you have a license to do it. The minute you abuse that license, you ruin your own credibility and that of everyone like you. There is an expectation that you can speak truth to power in a way that someone on the inside cannot. But that truth better be truthful, and better not be alarmist and so when I talk about the cost of not innovating, I've never seen that to accompany with some sort of a platitude. That's saying it with from the perspective of a pundit, I'm speaking from the perspective of a practitioner, and from the perspective of someone who has a degree of fluency in capital markets, where I can say, these are some threats to your existing business, where if you don't change, and they keep growing the way they growing already, I just want to role play what your earnings look like three years from now.
It takes audacity, but it also brings credibility. You're acting not just as the voice of the customer. You're actually acting as the voice of the investor. And that's a very important distinction. So if you have the access to that kind of power inside the company, as an outsider, it's not good enough to just be a voice of the customer. You have to be able to convey to them in real terms and actionable terms and credible terms, a completely innovation design agnostic investor who has no idea what Agile is, he doesn't care about design thinking, who's never heard of AI. They are still going to be really disappointed if you don't implement a radical transformation, because this is what your stock starts to look like, if you do nothing. That's a very important thing to do. If you don't do it, you have a very real risk of squandering credibility and wasting everyone's time. So yes, the reason I know that is because I have done some Voice of the Customer work. It's like “look, dude, you're the fifth person here who said that!” I'm the person who is responsible for talking about what customers are saying. E.g. My CFO doesn't care. My CFO is very worried about the last difficult question he got on our last quarterly earnings call. How is he going to talk about customers on the next quarterly earnings call? How is he going to talk about some of the new things we're building on the next quarterly earnings call? They never know how to articulate it until they see it.
When disruption is our largest longest standing client has just left us for a startup, it’s probably too late for you to change. He waited too long. Now you can take some emergency action to minimise the damage and get out in front of it, but you are going to have to move faster and more aggressively than ever before. You have six weeks to get your stuff together, and to be aggressive and ruthless and be a better startup than the startup that's killing you. The phase before that, is we innovate.
But what they say is we don’t know what our return on innovation investment is. We have pockets of it, but we don't exactly know what's the ROI. We don't really know how it saves us money, we don't really have a clear sense of how it's growing our business and new customer segments, but we're pretty good on Agile!
Then there's the third day with the pre pre pre disruption, which is we just “ we don't really have an environment where there are many intrapreneurs here. If they're here, we don't really know where they are. It's just not a company they like to move to.”
That's the ideal place to start. That's when you have the luxury of throwing an intrapreneur coming out party! We don't ever want to get to a place where our biggest incumbent, longest standing customers and investors leave us for a startup. You probably aren't innovating already, but you're not necessarily innovating in a way that's going to make those pain points disappear.
RC: Greg, I was in this position a few years ago. Just finding limits to what I was able to do. I think a great many of people within existing large businesses right now, probably finding frustrations and not knowing what to do.
GL: The minute someone says, “well, I don't play by those rules (and I'm still here)”. There's a huge emboldened crew of people that will emerge out of the woodwork, stand up and be counted and join that crusade. But someone has to go first and the person who goes first also has to find an executive Godfather, who will join them, who will say “listen, if you are willing to raise your hand and join this, you have my support, I will fight like hell for you. The thing that keeps me up at night, is that I am at the helm of this organisation as it goes extinct!”
That's the snowball that gets the whole thing moving. It’s that union between the punks and the pinstripes, between the godfathers and the entrepreneurs. And that's, that's always where it starts.
RC: The Godfather, as you described in the book, is someone who supports and protects the entrepreneurs, so they can capitalise on these opportunities.
GL: They play a role that's probably a little bigger than that. Their job is to fight for you. That means that people they've known for their entire career inside of that organisation: They're going to have to say no to them! It means they're going to have to push back on them. It means they're going to have to call in favours when the normal obstructionists get in the way. They say “you can't get in the way this time”. I think the extent to which that's part of the job description is often minimised.
The other thing that the Godfather does is it helps the intrapreneur team translate market validation into ROI into investor validation. Why would our shareholders care that you are spending our money in this way? As soon as they're able to add that translation layer, where the voice of the customer and customer validation is also an engine of telling a story to investors that it solves a problem that the company has wanted to be able to say to investors, we're fixing that thing you don't like that is not possible without a Godfather. It's not possible in just a single product, either. It's a portfolio of products that do that bad governance system and the extent to which the Godfather is preparing the intrapreneurs to make an investment case.
We have a portfolio of products sprinting toward the same goal. It's okay for your product to fail, it's not okay for the portfolio to fail.
The only thing that's not okay is if it takes you longer than eight weeks to fail. If it takes you more than $300,000 to fail, then we have a problem on our hands. If you can sprint now and fail quickly, great. We should have some places that are generating enough outcome based positive validation that we can reallocate your team, reallocate your technology, reallocate your money. So either you're pivoting and you're starting over, or you're working on something that is gaining traction and need some more people like you to join. That's the role of the Godfather.
RC: When we first exchanged emails Greg, one of the things that we talked about early on was this idea of the portfolio of experiments. And I've never heard it called that before, but now that I recognise it and understand it, it makes utter sense. If you have a number of experiments, some succeed, some fail. This doesn't seem to be the way that enterprises work. They work on set programs. They're all focused on that. Why do you think organisations aren't multitasking?
GL: Well, look, most experiments fail! The reason a VC doesn't invest in one single startup is because nine out of 10 are going to fail and that there has to be a degree of diversification and throughput. Which gives you room to fail. That's not to say that you have a tolerance of underperformance, but people have to die on their sword. Then you can come back to life after you die on your sword.
If a company is not willing to invest in a portfolio mindset of venturing, then they're not prepared to venture. They're going to put so much pressure on something, one product, to be okay. Then a year later, it's exactly like every other business in the company. It's moving slow, it's not really disruptive, it's not really changing anything. It's just been co opted to the point where it's safe to the point of being inconsequential. So I think what having a portfolio forces you to do as a business is build some sort of scaffolding for one of those experiments to work and being very clear about how it's going to grow, once it starts to work, what is the next? What is a Series A inside of this company? What is a Series B mean inside of this company? What does an exit look like? Do we want this to be a standalone product, a semi autonomous business unit or do we want it to be a spin off? Do we want this team to build it and then go and be a portfolio manager across other products that are like it?
As we're dipping our toe in intrapreneurship, a portfolio mindset is that we're changing, and we're prepared to put some old habits to death. That message will not be sent with a single product. You are not giving yourself the permission to do all the radical changes for that product to evolve.
Most people's first startup doesn't work out. A good venture should be risky. It should be that you strike out a lot and you have to be able to attract people into your company or give permission in your company who are willing to swing aggressively, and don't slow down. When you come here and you work in this portfolio, the rule is you don't slow down, even when it's really scary. You don't slow down, even when you think you're going to crash and burn and spin out of control. Don't slow down.
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