bhc-audio-transcript

I want to start by looking at the calendar. It is January 29th, 2026. And I want you to put yourself in a very specific mindset. Imagine you're sitting in the executive leadership offices of Elevate Rapid City. You're looking out the window at the skyline. And frankly, you have a lot to be proud of. You have taken a town on the prairie and turned it into a legitimate, recognized tech hub. It really is a victory lap moment. I mean, if you look at the metrics, job growth, startup density, capital raised, Rapid City has outperformed almost every expectation over the last few years. It's not just hype anymore. The ecosystem is real. But, and you knew there was a butt coming. While you are looking at that skyline, there's something happening about 60 miles south in Custer. There's a new piece on the chess board. The Black Hills Consortium, our BHC, founded by Luke Alvarez. And if I'm sitting in that office at Elevate looking at this new entity, my immediate reaction isn't, you know, warm and fuzzy. It's probably, wait, is this a threat? That's the natural instinct. Of course it is. You see a new economic development organization, a new accelerator, this massive new tech campus popping up in your backyard. The knee jerk reaction is to ask if they are trying to eat your lunch. Are they going to confuse the donors, fragment the talent pool? It's the fear of the zero sum game. Right. If they win, do we lose? That's the question. But we have spent the last week combing through the BHC executive summaries, the entity structures, the financial roadmaps, all the paperwork Luke Alvarez has put on the table. And the mission of this deep dive is to challenge that knee jerk reaction. We are going to build a case that BHC isn't a rival. In fact, when you look at the mechanics of how it's built, it looks designed almost piece by piece to be the perfect complimentary partner to Elevate Rapid City. Exactly. When you're actually digging to the data, this doesn't look like a hostile takeover. It looks like a puzzle piece that Elevate didn't even know it was missing. So how do we prove that? I want to start with the map. I think the geography here solves about 50% of the mystery immediately. It does. It really does. If you look at Elevate's mandate, it is very specific. They own Rapid City. That is the urban core. That's the density. That is their tax base and their sandbox. But BHC has drawn a circle around that sandbox. They are focusing entirely on what the documents call the doughnut. That's the term. Yeah. They are targeting the eight small towns that Elevate naturally doesn't reach. We're talking Custer, Hot Springs, Hill City. These are communities that are too small for a major metro organization to focus on effectively. But they're too big to just ignore. And they aren't stopping at the state line, which was the part of the map that really surprised me. They are pushing west into Wyoming Newcastle Sundance. This is what they call the two-state solution. And it's a fascinating strategic move because economic borders are rarely the same as political borders. By operating as a 501C across state lines, BHC is creating a regional economic zone. OK, but play doubles advocate for a second. If I'm in Rapid City, why do I care about Newcastle Wyoming? That feels like a world away. Because of gravity, economic gravity. If BHC succeeds in activating that rural perimeter, if they capture talent and revenue and Sundance or Custer, where does that value eventually flow? People in those towns need an airport. They need major health care. They need Costco. That flow feeds back into the regional hub, which is Rapid City. So they aren't fighting for the city center. They are activating the rural perimeter to feed the center. Precisely. It's a feeder system. BHC is essentially saying, we will handle the rural logistics that are too inefficient for you to touch. And we will make sure the output flows to you. Now, usually when a new organization pops up, they try to differentiate themselves by saying, we do everything differently. We're nothing like the old guard. But BHC is taking a weirdly different approach. They seem to be flattering elevate by well copying them. It is intentional mimicry. It has to be. Luke Alvarez didn't build BHC in a vacuum. He clearly spent a lot of time studying elevate's wins. Let's look at the accelerator. Elevate has wildfire labs, which has been a huge success. BHC is launching seed labs. And the structure is almost identical. It's a six-month program taking startups from idea to revenue. They aren't trying to reinvent the wheel here. They looked at wildfire labs and said, that engine works. Let's build the exact same engine, but put it in a rural chassis. And it's not just the accelerator. They are launching an annual convention called the cult, which is short for cultivation and important distinction. A very important assumption. But they are benchmarking the cult directly against Elevate's MX summit. They want the same caliber of speakers, the same level of discourse. They aren't trying to run a county fair. They're trying to run a tech summit. It signals ambition. But the most telling detail, and this one is hidden deep in the financial docs, is the compensation. This has really cut my eye. Oh, the salary benchmarking. Break this down because this feels like a very specific signal. So Luke Alvarez's compensation package is CEO, is set in the $396,000 range. Now that's a very specific number. It wasn't pulled out of a hat. It was intentionally benchmarked against Tom Johnson's compensation at Elevate. Hmm, some might read that as aggressive. Like, I'm worth as much as you. I don't read it that way. I read it as a signal of professional parity. If Alvarez came in taking a $50,000 salary, it signals that this is a hobby. It's a side project, a passion play. By matching the market rate of the established leader, he's saying, we are playing at the same level. We are a serious institution. It's like saying, I see the standard you set. And I am matching it to show I'm a peer, not a subordinate. That's the key. Peer's partner. Hobby's getting ignored. He wants to be seen as a peer, so the partnership conversation can happen at eye level. So we've established that they are copying the best parts of the Elevate model. But a partnership only works if you bring something new to the table. You can't just be a clone. So where is the divergence? What is BHC doing that Elevate isn't, or maybe can't? This is where we get into the gap-filling strategy. BHC is tackling sectors and capabilities that are, frankly, outside Elevate's comfort zone as a major city organization. And the big one jumping out at me is cannabis. Right, this is the elephant in the room that most city councils just don't want to talk about. BHC has an entity called Growwise. Describe what this is, because it's not just growing plants. No, it's tech. Think of it as a sauce platform software as a service, specifically for cannabis compliance. It's sort of like property meld, but for dispensaries. And why can't Elevate just do this? It's a huge industry. Optics and politics. Elevate is heavily tied to municipal funding, city council relationships, broad corporate sponsors. And even though cannabis is legal, it's still a political minefield in many ways. For a city-backed org to launch a cannabis tech platform, that's a lot of headaches. But for private rural-focused entity like BHC. The rural private sector is much more libertarian about this. They can dive right in. And here is the economic key that Elevate needs to understand. The cannabis industry generates massive revenue, but a lot of that value leaks out of the region because the software and compliance tools are all built in California or Colorado. So the dispensaries here are paying subscription fees to companies in Silicon Valley. Exactly. Growwise is designed to capture that leakage. They capture that high-growth vertical revenue in data from the local cannabis industry revenue that otherwise leaves South Dakota. And they funnel it back into the local ecosystem to fund other startups. So BHC handles the edgy high-growth sector that Elevate might be too polite to touch, but the whole region benefits from the retained capital. That is the textbook definition of a complimentary asset. Let's switch gears to something more tangible. Bricks and mortar. Because in the source documents, there is a lot of emphasis on construction ready. And honestly, reading through the timeline differences between how BHC builds and how a city builds, it's startling. This is the other major gap in rural areas. Usually you can attract a remote worker to move to the black hills, but you have nowhere to put them. The housing stock is old or non-existent. And usually solving that takes years. If you go the traditional route, the, let's call it, the Elevate route, you're talking about TIFFs. Tax increment financing. Right. And for listeners who don't spend their lives in city council meetings, give us the 10 second version of why TIFFs are so slow. The TIFF is basically borrowing against future tax revenue to pay for current improvements. It's a great tool, but it requires public hearings, city council votes, environmental impact studies, I mean, you're talking 18 to 24 months of paperwork before a single shovel hits the dirt. But BHC is moving at a different speed. They're moving at the speed of private capital, specifically $1.8 million of founder capital from Alvarez. They have a 60 by 40 building on the Custer campus right now. And there's a detail here that seems almost too good to be true. The documents say it needs no permits for the remodel. How is that possible? That is the advantage of the specific rural location and the property type. They aren't dealing with the same density of red tape that you find in downtown Rapid City. It's construction ready immediately. And the founder, Luke Alvarez, isn't exactly a guy who sits in an office waiting for a contractor to call him back. No, and this is relevant to the culture of the organization. He's personally built three custom homes. He'll live in a van, built a tiny home, built a barn to minium. He acts as his own project manager. So while the city might be waiting for the zoning board to approve a variance on a setback, BHC is literally poor and concrete. That's the contrast. Elevate is the aircraft carrier. Huge power, massive impact. But it takes three miles to turn. BHC is the speedboat. You can zip into the small inlets, turn on a dime, and build things overnight. And you need both to win the naval battle. Exactly. You don't want the speedboat trying to launch air strikes. And you don't want the aircraft carrier trying to dock at a fishing pier. They have different roles. There is one more layer to this BHC machine that we have to unpack. It's the AI native concept. We hear everyone talking about AI right now. But BHC claims to have an 80% multiplier. What does that actually mean in practice? It means they're trying to solve the small town resource problem. I think it's a small town. You don't have the budget to hire a 50% staff. You maybe have a budget for five people. So how do you run a massive accelerator and a convention with just five people? You use tools like Cloud and Cursor. And we aren't just talking about CHGBT writing funny emails. Cursor is an AI-powered code editor. It actually writes software. Cloud can analyze and draft complex legal documents. The documents outline a workflow where AI handles the drafting of legal docs, the initial code generation, the marketing copy, the strategy outlines. So the humans are just editing and approving. Essentially. The claim is that a team of 60 people using this stack can output the work of a team of 300 or more relevantly for custer. A team of five can output like a team of 25. And here is why I think this matters for elevate. If BHC figures this out, if they actually document the playbook for AI Native Economic Development, that is a product in itself. Huge value. Elevate is a bigger organization, which means they are naturally more bureaucratic. If BHC can act as the R&D lab testing these AI workflows in a low risk environment, they can hand that playbook to elevate. Here is how you automate your grant writing. Here is how you automate your compliance checks. It's BHC doing the R&D on AI for civics that elevate can then leverage without having to take the risk themselves. Correct. It's another form of partnership. We'll be the crash test dummies for the new tech. You guys scale it once it works. OK, so we have the geography, the niche sectors, the speed, and the tech. Now I want to talk about how these two engines actually mesh gears because the Shark Tank reversed concept in the proposal sounds like the biggest tangible opportunity for them to work together. This is my favorite part of the roadmap because it flips the traditional model. Usually, if you are a startup founder in South Dakota, you get on a plane and fly to San Hill Road in California to beg for money. You go to the money. Right. BHC is flipping that. They're inviting VCs to fly to Custer for a three day experience. They stay on the campus. They tour the badlands. They eat great food. It's a destination pitch. But here's the proposal. If a VC flies all the way to South Dakota to see seedlabs companies in Custer, why on Earth would they turn around and fly home without seeing Rapid City? They wouldn't, or at least they shouldn't. And that is the partnership offer. It's a shared pitch day. So the investor comes for the Yellowstone experience in the hills, but then takes a one hour drive to see the Silicon Prairie experience in the city. It's a perfect loop. Elevate gets access to investors who might not have flown in just for a conference room meeting. BHC gets to show off the density of Rapid City to validate that this isn't just some weird outpost. It's a real region. Both entities double their exposure to capital without doubling the logistics work. And BHC is explicitly saying in these documents, we want to share our investors. There's a massive olive branch. They aren't hoarding the contacts. There's also a media component here. BHC has a media arm called the session. This addresses another gap. Elevate is fantastic at corporate comms press releases, ribbon cuttings. But BHC is building a content engine podcast, YouTube documentaries, long form storytelling. And content engines need fuel. They need stories. It's exactly the session needs startups to interview. Elevate has a stable of startups and wildfire labs that need exposure. BHC is essentially offering to be the media production house for the entire region's tech scene. Free marketing for Rapid City paid for by BHC's media arm. It amplifies the Black Hills tech narrative nationally. Because frankly, a podcast about tech in the badlands is a cooler hook than a press release about a zoning change. Let's zoom out to the political landscape. Because we are looking at a very specific date on the horizon, July 4th, 2026. The semi-quence intennial. The 250th birthday of America. And Mount Rushmore is going to be the center of the known universe for that week. It's a massive stage. And it's also a massive political lever. To get things done in South Dakota, to get state funding, to get infrastructure improvements, you need influence in Pierre, the state capital. And South Dakota is a unique political environment. It's heavily rural, heavily agricultural, which can be a challenge for elevate. Sometimes the city tech guys can be viewed with suspicion by the rural ag guys in the legislature. It's a tale as old as time. But this is where the unified region idea becomes a weapon. If elevate goes to Pierre alone, they represent the city. But if elevate and BHC go to Pierre together, now you have the urban tech weight and the rural agricultural weight. You cover the whole map. You can't drive a wedge between them. If they speak with one voice, this is good for rapid city and it's good for custer. That is a formidable political block. It creates a unified front that is much harder for the governor or the legislature to ignore. I want to touch on the ecosystem view before we wrap up. Because the sources describe this flywheel effect. BHC has a program called Settle the West, which is modeled after Tulsa remote, giving people $10,000 to relocate. Right, and the skeptic might say, well, if BHC pays someone to move to custer, that doesn't help rapid city. But that ignores human behavior. Completely. If you live in custer, you aren't staying in your house 24-7. You're driving a rapid city for Costco. You're going there for health care. You're going to the regional airport. You're going to the movies. So the disposable income of that BHC resident is still flowing into the elevate economy. Correct, even if BHC wins the relocation stat, elevate wins the economic impact. And BHC is also focusing on something longer term. The kids. The seed foundation. Yes, the nonprofit arm. They're putting Starlink in rural homes and teaching AI curriculum in rural schools. This is the brain drain plug. Exactly. Right now, a smart kid in Newcastle, Wyoming, probably thinks they have to leave the region to work in tech. BHC's trying to catch that kid, make them tech literate, and show them there's opportunity here. And in five years, that kid might be the lead engineer for a startup in rapid city. Expanding the talent pool benefits the biggest fish in the pond. And the biggest fish is elevate. So bringing this all together, when you strip away the fear of the new, what you have is a proposal for a two-engine economy. You have the established powerhouse and elevate the urban core, the corporate connections, the scale, and you have the agile innovator in BHC, the rural perimeter, the risky niche sectors, the speed. And BHC seems to know its place. They aren't trying to be the metropolis. Oh, the documents are clear. They want to be the vibrant ecosystem that supports the metropolis. They are building the housing, the talent pipeline, and the political alliances that elevate needs but can't build alone. The message to elevate leadership seems to be, we aren't here to take your slice of the pie. We are here to bake a bigger pie. Yeah, we brought our own ingredients and our own oven. I love that. So here is a final provocative thought for you to mull over. We know that one person with AI can build a complimentary ecosystem in 60 days. Luke Alvarez has proven that. He has. But imagine what happens when the regions established powerhouse elevate Rapid City, formally joins forces with this agile new player. If they align their calendars, their lobbying, and their deal flow, it's a force multiplier. Could the black hills become the most vertically integrated tech region in America by July 4th, 2026? It's a bold ambition. But with the eyes of the world on Mount Rushmore for the 250th birthday, the timing might just be perfect. It might be. Thanks for taking this deep dive with us we'll see you next time.