Hedgehog Growth // June Update

Nashville AI Week wrapped up recently. Presenters essentially said: "If you're not using AI, you're behind" or even less helpfully, "If you're only using AI a bit, you're way behind."

For many AI applications, we haven't even reached the peak of inflated expectations. Very few concrete uses are discussed as counterweights to the hype and fear-inducing narratives.

Unfortunately, not enough specific detail was shared about how to derive meaningful value from AI. Overall, I see too much abstract talk, both online and in person, about "using AI" with too little practical detail on how EBITDA is meaningfully improved through AI implementation.

Recently, much of my work with non-tech companies has focused on driving revenue growth and scaling efficiently by extracting meaningful value from AI capabilities.

Real-World Case Study:

A retail goods company recently shared with me that their primary growth is determined by how quickly they can introduce new "bestsellers." Their existing product development process follows these steps:

1. Brainstorm high-level concepts for new products, sometimes collaborating with other brands for co-branded partnerships (e.g., Supreme x Louis Vuitton)

2. Develop 5-10 ideas into concept briefs

3. Design sketches of these concept briefs for early visual ideation

4. Develop prototypes for real-world feedback and testing

5. Create 2-4 limited-run products for market feedback

6. Select a product for mass production and deploy full marketing playbook

This process costs them between $500k-$900k per product, all-in. Their success rate with new product development is about 20% for creating a "bestseller." Ultimately, the cost of developing a new bestseller is about $3M and takes 9-18 months from concept to revenue.

Using AI, we believe we can reduce the all-in cost of developing a new bestseller by $2.2M.

How? Using deep research, large-context synthesis, and generative imaging, we've pulled customer feedback into the early phases of the cycle to de-risk investments against a broader field of concepts:

• Increase the number of concept briefs by 10x, from 7 → 75, creating a much broader field (deep research + parallelization)

• Skip manual sketching and expensive, slow, real-world prototyping by going directly from concept to AI-generated product images

• Test new product concepts with real customers using digital channels

• Gain immeasurable brand halo benefits from pulling customers into the new product development process

By involving customers earlier in the process and testing before expensive prototyping, we can evaluate a much broader field of bestseller candidates, gauge audience interest in real time, and then select a much narrower product line to prototype and test in-store — materially reducing costs and accelerating validation.

This classic application of traditional Lean principles (customer feedback loops, early testing) is activated in fundamentally new ways because of AI. The AI disruption cycle is new, but will rhyme with disruption cycles of the past (Industrialization → Mainframe → PC → Internet → Mobile → Cloud). The frameworks and principles that made winners in the past will endure and be reinterpreted in the AI age. If you're curious, you can read more about this in my writing on Revenue Engineering on Substack.

Recently, most of my work has been with non-tech companies ≥$10MM, searching for practical AI applications to accelerate revenue or scale efficiently.

While few of these discussions turn into projects immediately, I'm deeply enjoying the early-stage education, brainstorming, and strategic networking.

I want to talk with non-tech CEOs who are struggling to articulate a crisp AI strategy. If you know one, please forward them my info. Let's meet.

Since 1964, some potentially notable changes to quality of life include:

• Calorie supply increased by 760 kcal (+34%)

• Life expectancy increased by 20 years (+38%)

• Extreme poverty dropped by 36.4 percentage points (-80%)

• Infant mortality declined 75%

• Adult literacy rose by 24 percentage points

• Average income per person tripled (inflation adjusted) from $3,500/year to $12,000/year

Nashville Connections

🦔 I recently sat with Nashville Entrepreneur Center's Sam Davidson, who also hosted the first Entrepreneur Day at Geodis Park. Excellent event showcasing what founders in Nashville and beyond are doing to innovate in creative ways.

🦔 Zach Todd is a fractional COO helping visionary leaders execute. As I still do fractional product and consulting work for tech businesses alongside building Hedgehog, I learned a lot from him. You might too.

🦔 Denise Collins was headed to the Music City Rodeo by way of the Music City Dental Conference. I happen to know the rodeo was a great time, and wish we'd attended. Rainforest Payments is also a great time. If you're building your own payments solution, I can personally vouch for their team and tech.

🦔 Gary Zukowski, a serial entrepreneur (ex. TweetMyJobs, Flyp Financial) recently moved to Nashville and kindly reached out to meet for coffee. We had a wonderful chat at Honest in Germantown. He's looking for ways to plug into the BNA ecosystem.

🦔 Mike Rosengarten and I met at Malin to discuss the future of work orchestration. We are both optimists about systems to orchestrate, manage, and QA agents.

🦔 Craig Cook started a fractional CFO practice. He's grown Equitas Partners to offer comprehensive financial consulting services covering bookkeeping, strategic planning, and advisory. He's looking for Fractional CFOs if anyone in your network is a fit.

🦔 Mark Kenney is a speaker, executive, and leadership team coach based in Franklin. He's passionate about helping teams work better together and frequently speaks at corporate retreats.

🦔 Chris Hefley and I caught up many years after our LeanKit adventures. He's building LLM-as-a-Service to enable you to easily build and deploy agents anywhere. I recently attended a webinar they did on model context protocol, which was insightful and illuminating.

🦔 Charlie Jordan shared VITL's explosive growth since November, proving that usability and intuitive (beautiful) design is not a nice-to-have. VITL saves pharmacies and clinics 24 hours and $11,000 per month by replacing traditional enterprise software with intuitive, modern interfaces.

🦔 Jessi Roesch is facilitating the biggest (and most important) wealth transfer to ever happen in the US. Downland helps retiring farmers (who rarely have succession plans) pass agricultural land down to the next generation. It's critical to ensure farmland stays in production; AI-driven estate planning and land-matching bring landowners and future farmers together to make this possible.

🦔 Phil Shmerling recently announced his new startup, Brook. Phil's bringing banking back into entrepreneurship with a vision to power the next generation of companies. Venture Capital is for $1B+ scale companies. Brook is for everyone else, offering founder-friendly financial services and banking designed specifically for entrepreneurs building sustainable businesses.

🦔 Ryan at Bugle consistently impresses me with his ability to read voraciously and apply those learnings immediately. Bugle brings modern software to a grossly underserved market, nonprofit and community service. Bugle helps organizers and volunteers connect in intuitive ways to harness the vast economic power of volunteerism.

🦔 Chris Gerding at Boomalang is doubling down on humans where it really matters. Boomalang orchestrates 15-minute web-based sessions with native speakers for language learners. We're chatting about how AI can enhance, not replace, the power of human connection and presence.

🦔 John Byers at Alliant gave me an education on what's changing with the insurance landscape in the US. Important topic as we all bear the rising costs of claims impacted by homes built in the path of increasing wildfires, hurricanes, and other climate-based challenges.

🦔 Sarah & Christian from Five Four Partners visited from Indianapolis, where they run a startup-focused digital marketing agency. I love working with early-stage startups, and they are expanding into the national market.

🦔 Brian Burke and I chatted about Craft Ventures, and early-stage hiring. He's building Cabal and using AI to help investors and entrepreneurs get more leverage from their networks.

🦔 Zac Litwack runs a performance-based marketing agency. Zach literally has skin in the game because 4th Quarter invests in all the companies they work with. I love this idea of radical alignment and being an owner in the work you do.

🦔 Kishore Tummala is building the premier EHR system for behavioral health practitioners. They're still perfecting the product and not yet going loud with go-to-market efforts, but they're just starting to make a little marketing splash. Big things to come from the Mindwise team in the behavioral health space.

Be well,

Michael 🦔 🦔 🦔