Interview with Becky Splitt from Corporate Venture Studio Tenney 110

Becky Splitt is an entrepreneur, investor and corporate innovator. Most recently she worked at Tenney 110, American Family Insurance's corporate venture studio focused on PropTech. In late 2023 it was revealed that American Family (AmFam) was shutting down Tenney 110.

Corporate venture studios are gaining in popularity but that by no means makes them easy to scale. Recently, we interviewed Brian Bemiller from 1848 Ventures, another corporate studio built by an insurance company. 1848 Ventures has launched several ventures in market and continues to scale.

There are many challenges with building a successful corporate venture studio, and Becky has incredibly experience and insight into the journey. This is an incredibly detailed and candid interview, well worth reading through and learning from.

1. Can you share a bit about your background?

I spent the majority of my last 6 years helping American Family Insurance design, launch, grow, and just recently wind down, a corporate venture studio, Tenney 110.

My career started on the ground floor of a tech startup in the voice recognition space which we took public after 7 years. I went on to spend many years running MSN’s international business at Microsoft, before founding and leading a venture-backed edtech company that was acquired in 2018. 

2. Please share a bit about how Tenney 110 came to be?

Like many strong corporations AmFam knew it needed to increase investment in innovation, to build a growth engine for the future, at the same time recognizing that the industry leaders of tomorrow would be doing more for their customers than selling and servicing insurance. 

The company had developed AmFam Ventures, that was well on its way to becoming the #1 Insurtech corporate venture capital firm. While minority investments in startups provide a front row seat to developing technologies and innovations, and nice return potential, it also helped AmFam leaders realize where there are both gaps in the market and opportunities to better serve their stakeholders if they had a controlling interest…majority ownership. A large insurance company isn’t going to offer up an unfair advantage, such as the deep data they have on property risks, for a high-risk startup they don't control.

 At the same time that AmFam executives were starting to consider a venture studio. I had recently sold my last company and was asked to help them think through the pros, cons and process for launching Adjacency Holdings Inc in 2018 (later renamed Tenney 110) and became a believer in this new model of R&D. It was a startup building startups with clear strategic guardrails, so I continued to consult nearly full-time. 

3. What was Tenney 110's validation process for exploring new potential ventures/startups? How long did that process take? What sort of team was put against the process / each venture/opportunity?

The ideation and validation process at Tenney 110 evolved over time, though always started with a deep understanding of a customer pain point, in an adjacent space believed to be strategic to the company. Subject matter experts were brought in to spend a week with a small core team of design thinking, market research and insurance business experts. After generating, prioritizing, and winnowing out good ideas for potential ventures using well defined criteria, a few concepts were selected to move into validation. 

The validation process varied based on complexity and access to potential customers, lasting between 4-12 weeks. This was a rigorous process of customer and market testing, as well as scoping the solution and a plan to operationalize it, in order to test viability. It almost always involved iterating on a concept mock-up (often a website) or light prototype, and interviewing a pipeline of prospects.

A typical validation team consisted of a few folks who participated in the sprint week, as well as a member of the studio's product/tech team. If no available Entrepreneur-in-Residence (EIR) was a good fit to lead the team, one of these individuals would serve as the venture lead through validation. Other resources from the studio and enterprise were leveraged as needed for things like financial modelling and refinement of market sizing. Importantly, a senior leader from within AmFam was identified as a sponsor. The inability for a senior executive to get excited about the concept was a sure sign of poor fit for the studio, even if it otherwise demonstrated high potential. 

4. Can you share metrics on the # of ideas generated versus pursued versus validated and so on?

The studio's initial approach involved a smaller number of ventures, heavily supported by the core team, with tighter connection to the enterprise. Ventures spanned multiple opportunity spaces (for example: financial health and wellness, cyber and insurance infrastructure). In the first few years there were maybe 4-7 ventures active across the Ideation, Validation, and Build stages.

By 2023 the studio had transitioned to a high volume, highly focused business model, running quarterly sprint weeks with a continuous process of recruiting and onboarding EIRs and advisors while more heavily leaning into outside experts for things like focus groups, market research and financial modelling. The sole focus area was PropTech, with an emphasis on property management and home ownership, given the obvious fit with homeowner insurance. It was not unusual to have 30 concepts generated a quarter, whittled down to 4-6 in validation, two of which make it through MVP development and one in market/growth stage. 

5. What differences do you see between corporate venture studios and non-corporate venture studios? Pros / cons?

A corporate studio must be certain they bring an unfair advantage to the table. They have assets in the form of data, talent, capital, brand, technology, channels, and of course access to customers. These things can be nearly impossible for a startup from the outside to access. Indeed a wholly owned venture studio still has to jump through many hoops to unlock their potential. So whatever the unfair advantage is for a particular venture, that must outweigh the tax that comes with building a startup within a large corporation. 

Corporate studios also, by and large, have a willingness to spend more funding and time up front to do the market and customer testing mentioned above before ever writing a line of code. Provided this doesn't dull an important sense of urgency or turn into bloat, that should lead to a better batting average over time.

Even at Tenney 110, where the studio was arm’s length from the mothership (a separate legal entity, intentionally prohibited from operating within the regulated insurance space, with capital to deploy), AmFam executives, who made up Tenney 110’s board, required that things like IT, security and hiring practices conformed with those of the corporation. Again, to compete with well-funded startups you must believe you can both leverage the corporation's assets and overcome the inertia of a large corporation with respect to each venture. 

The inverse of course is that non-corporate studios are more nimble, often move more quickly and offer greater flexibility in funding and exit options. They can use lightweight tools and processes that may not pass robust cyber security or audit practices. They can hire and fire team members more efficiently. And they can provide a clean guide path for a venture that may prove through validation not to be a good fit for a majority owned subsidiary, though it shows strong potential as a venture backed startup.

6. What's your perspective on the future of corporate venture studios?

I believe American Family did more things right than most corporations in their approach to Tenney 110, and still the studio fell prey to:

• Insufficient support and understanding from the top when leadership changed; and,
• Lack of priority for funding and resources when both became more constrained.

This is not unique to Tenney 110. There seems to be a hype cycle underway for corporate venture studios, which I suspect will eventually lead to more companies learning similar lessons before turning to independent studios like High Alpha and Highline Beta who can support the corporation's mission, including the option to maintain majority control, while avoiding the pitfalls inherent in a culture finely tuned to support low risk, low failure, high volume business practices.

I'd love to think it will become the norm for large corporations to learn to disrupt themselves from within. For now, I see little evidence of that (albeit there are a few exceptions such as those who develop and manage competing brands within a particular vertical or technology companies where continuous innovation is the norm).

7. Now that Tenney 110 has shut down, what happened to the ventures you were working on?

There were a half dozen active ventures in the studio when the decision was made to dissolve Tenney 110 and shift focus to innovation across core insurance businesses.

• A few ventures were too early stage or lacked a strong enough team to consider spinning out. They were wound down (learnings and IP cataloged, pilot customers notified and team members given notice). None had support from both the team and an internal executive sponsor to make a spin-in successful in a short timeframe.
• One venture had a very strong EIR and validated concept, not yet launched. The EIR chose to go another direction.
• Two ventures were in-market with customers, strong signal and strong EIRs who had the desire to raise outside funds and grow the business. The studio board approved their recommendations and some bridge financing. Both are going strong (Fixle, EnergyRaven).  

8. What types of roles did you hire for, and what were you looking for in candidates?

When hiring for the studio we looked for talent that was experienced (the time to train potential talent was too costly), and ideally that experience spanned both startups and large corporations. It can be very challenging for those who have only worked in startups to find the patience and understanding to appreciate that the slower, often overweight processes imposed on corporate ventures come with advantages that may improve their odds of success. 

There is a large pool of startup talent who are at an age and stage in life where the opportunity to apply their expertise to build another disruptive business, while enjoying competitive benefits without all the risk of raising the next round, is very compelling. 

When a concept neared the end of validation and was signally strong, we looked for a second or third-time founder with domain expertise who could attract the needed talent and lead the business over time. These individuals need to understand and like the idea that the venture may never spin out…may remain under the corporation’s control. Among other things, that means participating in the upside they produce, if successful, in the form of cash bonuses, phantom stock, or incentive programs, rather than direct ownership via equity in the business. 

9. Any tips for job seekers that want to work at venture studios?

One of the first things to consider if you are seeking to work as a venture leader within a corporate venture studio is the compensation structure. Should the company become a profitable, high growth company or business unit, what structure is in place for venture leaders to participate in the upside? If the company is on a path to succeed in the industry though falls out of the bounds for a majority-owned business (or business unit), is there a path to spin it out? Is the CEO of the mothership involved (on the board or otherwise) in the venture studio? How are venture funding decisions made within the studio? If by a board, ask to speak with one of the board members to vet their level of understanding and commitment.

If you are seeking a job as a core team member of the studio the idea of stability, good benefits, and the chance to hone your superpowers while developing expertise in the mothership's industry should be high priorities and/or exciting. 

Often there is a need to recruit team members from within the corporation for a studio venture or the studio's core team. If you are simply looking for your next leadership position, the venture studio is probably not for you. Every member of the studio is a doer; there are no delegators. However, if you are especially skilled at the customer pain a venture is addressing and passionate about making a difference, the studio may be a good fit. Have you broken at least a few rules in the process of helping to solve problems for customers and the company? Do you often feel suffocated in a highly structured, rules-driven environment? If yes to both, if you thrive in ambiguity, you may find the venture studio environment exhilarating. Be sure, however, to understand what the path looks like for those who stay with the venture should it become a majority owned subsidiary. This often involves a change in benefits and compensation as you leave the mothership to join a newly incorporated entity.