Steve Trosky October 4, 2016.
Knoxville has a prospering entrepreneurial community, but when it comes to talking about startups in Tennessee, people from outside the area generally think of Chattanooga or Nashville.
That may start to change.
Startup Day, designed to celebrate the startup and entrepreneur culture in East Tennessee, has grown from a half-day event to a week of workshops, networking and exposure in just four years. Now, with the help of the Innov865 Alliance, Innov865 Week has taken center stage.
“I’m pumped up about what’s going on,” said Tom Ballard, chief alliance officer for Pershing Yoakley & Associates. “It has exceeded my expectations.”
Innov865 Week took place Sept. 19-23. During that time, Etsy named Knoxville a “Maker City” at the inaugural Knoxville Maker City Summit, Oak Ridge National Laboratory announced Innovation Crossroads, an accelerator program aimed at entrepreneurs developing promising energy technologies, and T&T Scientific won $5,000 in the Startup Day pitch competition.
But there was more. Much more.
“What’s probably been most rewarding about the whole thing, is not the big events, but the micro events, (and) how many people have turned out for the micro events,” Ballard said. “They’re organized by other individuals. About 40 people showed up for the analytics lunch and learn. There were 30-plus people at a beer and biotech meet-up.”
“I’m pleasantly surprised at the growth,” he added. “I think it’s really a reflection of the vibrant scene that we’re seeing in the community.”
This is the first year of the Innov865 Alliance, which is comprised of the University of Tennessee Research Foundation, Oak Ridge National Laboratory, Launch Tennessee, PYA, Knoxville Entrepreneur Center, and the University of Tennessee Anderson Center for Entrepreneurship and Innovation. The alliance develops, supports and promotes the Knoxville region’s entrepreneur ecosystem.
“Innov865 Week is something that we think is very important for a couple of reasons,” said Stacey Patterson, associate vice president for research at the University of Tennessee and vice president of UTRF. “It allows people to better know what is going on, to be aware, and it allows us to celebrate some successes that we’ve had. I think all of those things are important.
“In the startup culture, it’s really important to have churn. It’s important for people to feel comfortable, to feel secure about it, because it’s a scary thing to go off and start your own company. We want people to know there’s an ecosystem here that’s supporting those entities, and is not just interested in starting those companies, but is interested in getting them from filing that paperwork all the way to selling their product or service. We’re here to support that and that’s what we’re trying to do and make people aware with Innov865 Week.”
Judging by the turn out at several events during Innov865 Week, people in East Tennessee are more aware.
‘A lot to be proud of’
Scripps Networks Interactive teamed up with the KEC to combine two accelerator programs, CodeWorks and MediaWorks, into The Works for Innov865 Week. The Works is a 12-week program that provides more than $50,000 worth of services, consulting and potential financing to a business.
Jim Clayton, the executive vice president of corporate giving and community relations at SNI, is a board member of KEC, which helped make for easier collaboration.
“I’m involved in everything KEC is trying to do,” Clayton said. “It’s just really, really important we have an opportunity for people who have business ideas to have that and make something of it. We do have an inferiority complex as a city toward Chattanooga and Nashville and we have no reason to. We have a lot to be proud of.”
Sean Alsobrooks is an entrepreneur who has started three Knoxville companies. He and his wife, Sara, have founded Makers Donuts and Remedy Coffee. They also founded Third and Grand Design Studio, Kanvess, Knoxlife Church and These Brave Ones. Sean Alsobrooks grew up in Detroit, moved to San Diego and has lived in Knoxville for the last 10 years.
He agreed with Clayton’s assessment.
“When I arrived, it was already here. You could feel it. I’ve sensed it in myself sometimes,” he said. “Nashville and Chattanooga, especially Chattanooga because it’s about the same size as Knoxville, it’s sort of like our rival. They’re maybe a little ahead, not in progress, but just in time. They started earlier than Knoxville with the downtown, new stuff happening and new energy. So, they’re a little bit ahead in years. Maybe that’s it. We just started later and we feel a little behind.
“I really am convinced we shouldn’t feel that way anymore. In the time that I’ve been here, I’ve seen so much positive change. So much cool stuff and energy and the vibe. So many amazing artisans. I wouldn’t feel that any more. I really wouldn’t.”
One of the biggest differences between Knoxville and other cities known for entrepreneurship is that Knoxville has been a little too modest.
Patterson said that UTRF recruited investors to Knoxville to judge the Tennessee Venture Challenge, an event held in April. The business plan competition awarded $30,000 in cash prizes.
“One of the judges was from Palo Alto, Calif., from a venture capital firm out there,” Patterson said. “And what he told us was, ‘You should be really proud of what you’ve got here, because I do these competitions all over the country, and the technologies and the pitches I saw here today are as good as I see anywhere else in the country.’
“We need more of that. I think it’s building more of an awareness, not being afraid of needing a huge story to tell. A lot of places, the West Coast, the upper Northeast, even Chattanooga, they tell the little stories, and they tell them often enough, that it starts becoming a buzz for the community and I think we need to do that more.”
Patterson said that is another reason the Innov865 Alliance is important.
“We have a unified message,” she said. “That’s something Chattanooga has done well. They have a unified message. They say it. Then they say it again. And then they say it again. Eventually, it becomes reality. It’s just a continuous telling of the stories and then celebrating our successes and celebrating failure, making people realize that it’s OK to fail. Just because this particular idea didn’t work, that’s not the end. You need to pick yourself up and go and make the next one a success. If you have that entrepreneurial bug, you need to really grab hold of that and take advantage of it.
“We have people in this community who are great examples of what entrepreneurship is all about. Terry Douglass, taking CTI to being acquired by Siemens, and then taking what he’s doing now into Provision and ProNova. He is an entrepreneur in every sense of the word. And he’s had lots of hurdles, it hasn’t been easy, and it didn’t happen overnight.”
The UT Research Foundation’s message is about connecting discovery to opportunity.
According to Patterson, about 50 companies have come out of the University of Tennessee, including intellectual property and research enterprise, over the last decade. About 38 of those companies are still in business in Tennessee. In 2015, those companies raised over $54 million in venture capital, and one of those companies went through a merger and acquisition event that valued it at $51 million.
“Our companies are having an impact,” Patterson said. “These are important, and will become important drivers in the Tennessee economy.”
Patterson said members of the Innov865 Alliance have met weekly for the last two years to talk about what needs to be done and how to push the mission forward. Bringing together several groups to collaborate is one of the outcomes.
“I think that maybe where we’re a little bit behind, is that we’re just now, in the last couple of years, able to come together, because everything was built independently in silos,” she said. “I think that’s happening now. It may not have been happening five years ago. I think that’s where we’re going to see some difference in our community over the next couple of years.”
Ballard has spent more than four decades building business connections between the University of Tennessee and ORNL, and public and private organizations throughout the nation. Formerly the director of partnerships for ORNL and vice president for public and government relations at UT, Ballard seems to know everybody in Knoxville. And if he doesn’t, he knows somebody who can make an introduction.
Ballard also knows the Knoxville entrepreneur community.
“If I look back five years versus today, I see a significant growth in the number of entrepreneurs, the people who are interested in it, trying to figure out how to do it,” Ballard said. “Clearly enabled by KEC and its programming, clearly by University of Tennessee, ORNL, with initiatives like the Bredesen Center, where one-third of the students there are interested in entrepreneurship. People are working a lot more collaboratively to facilitate, and that is reflected by the Innov865 Alliance and what we’re trying to do.”
Jim Biggs, executive director of KEC, said there are a few aspects to Knoxville’s changing entrepreneur climate.
“One is much greater collaboration between the organizations that are working with entrepreneurs,” he said. “There is a really robust network of support organizations here, and for them to be creating that continuity of services in a way that is more accessible to entrepreneurs, I think, has had a big impact, because the second thing you’re seeing is a greater density of startups here. I think you’re seeing more people more willing to take a chance on starting their own business, either because they are being encouraged to do so, feel like they’re supported in doing so, or hopefully they’re starting to see other people who are successful and who are modeling the opportunity and who are inspiring people to go out and take a chance.
“And I think the last thing that is happening, to some extent, even though this is still a challenge for Knoxville, is that we’re a little bit more risk tolerant than I think we’ve been over the last couple of years. We’re more accepting of the idea that some of these businesses will fail, and that the ability to learn from that and pick yourself back up is just as important as the fact that you tried in the first place.
“Those, to me, are the things that are changing on that macro level, that are leading to not just better recognition that there are startups here, but more startups, in fact, and better quality startups. When you look at startups across the board, they have a deeper sort of entrepreneur IQ. I think they’re more savvy about what they’re trying to accomplish. They are taking a more structured approach to it and hopefully are starting to see more success out of it.”
Alsobrooks described the entrepreneur climate as blooming. Patterson said it was “growing.” Clayton called it “vibrant.”
“It’s starting to find its legs,” Alsobrooks said. “In the last couple of years, with KEC, there is starting to be some built-in support and help. People are recognizing that Knoxville has what it takes. We just need to notice.”
When Alsobrooks was thinking about starting a donut shop in Knoxville, he did what any entrepreneur would do in this digital era. He turned to social media.
“I think sometimes businesses make the mistake of once we’re open, we’ll start to promote ourselves,” Alsobrooks said. “One thing we’ve done with Remedy and with Makers, from the very first idea, is get on Twitter, Facebook, Instagram, social media outlets, sharing ‘Hey, would anyone be interested in a donut shop?’ The feedback we got back from that one post a year and a half ago, it was crazy. It was like instant market research. In 10 minutes, we’re like ‘Maybe there is something to this.’ ”
Alsobrooks said from that moment, he and Sara took the community on a journey.
“We were putting it out there along the way. ‘Hey, we’re looking at buildings. We’re taking pictures.’ We shared every step,” he said. “I think a lot of times, people think people don’t want to hear about this, that it’s not a big deal. One thing I’m learning is that people want to hear it. And when you do that over the long term, six months, eight months, nine months, it’s like people feel connected.
“They don’t just arrive and it’s done, and complete and shiny. They feel like they’ve been on the journey with you. They’ve been through the ups and down. They’re emotionally invested, which is huge.”
Alsobrooks’ story also illustrates the support of the Knoxville community.
“I think that’s where Knoxville is amazing,” he said. “We’ve seen it with Remedy, and we’ve seen it with Makers, that the community becomes your biggest cheerleader. Share your story. That’s what we try to do from the very beginning, from construction to permits to approval to ideas to feedback to flavors. People are so excited and they root for you. Our Kickstarter was funded fully just by people who live around the city who wanted a donut shop in their neighborhood. People want to support cool things.
“I feel like in Knoxville, if you put it out there, and you share your story, there is such momentum to help push you and support you, not just cheering you, but even financially, which is what we saw.”
Patterson thinks there is need for more growth.
“I think that we’re kind of at a crossroads right now, where there are a lot of opportunities, a lot of interests, a lot of acknowledgement that entrepreneurship does have real economic impact,” she said. “I think the culture is growing. It’s something we need to be highlighting more, so that more people who are kind of on the fence will jump in and take advantage of the opportunities and support that is here.”
The UTRF primarily focuses on the University of Tennessee but is open to entrepreneurs and supports them regionally. UTRF has an incubator on the UT Institute of Agriculture campus that can house up to 17 companies.
“And those are UT affiliated companies. They don’t have to be based on a UT technology,” Patterson said. “But maybe a UT alum, a student. We have a couple of cases that are ‘friends’ of the university, because we want to support all of those endeavors that are happening here in Knoxville. We really think that creates a stir, that churn that we’re looking for in getting more entrepreneurs in.”
UTRF collaborates with KEC, Three Roots Capital, PYA Analytics, Launch Tennessee, Anderson Center and ORNL, among others.
“We all work together to try to make sure that these companies, as they’re fledgling companies, and they’re trying to figure their way through this forest, about where they can make a connection, where they can find capital, where they can find space, where they can maybe find technology,” Patterson said. “We have this huge number of faculty over here who have expertise in different technical areas, and so we try to link them. We try to be those connectors of the technology needs of the company to the expertise that exists within the university. That’s some of what we do.”
UTRF also is launching its Cherokee Farm Innovation Campus, a 77-acre research and development park that is envisioned to be a public-private partnership. It will be a multi-tenant building where companies will co-locate with the university in partnership with Oak Ridge National Laboratory.
“They’re coming here because of the entrepreneurial culture that we’re creating, and they’re coming here because of the tools and toys that they can have access to in the laboratories,” Patterson said. “And then the primary reason they are coming is because of the people, the expertise, the graduates. And that’s really important for us to continue to grow our economy here. As graduates, if we’re going to recruit the best and the brightest to UT, and graduate them, we want them to stay here. In order to do that, we have to give them opportunity.”
Tony Bova, co-founder of Grow Bioplastics, a startup working to commercialize plant-based biodegradable plastic made from lignin, a renewable waste stream from the paper industry, is a UT graduate student who has experienced Knoxville’s collaborative nature.
His first encouragement came from Tom Rogers, the director for industrial partnerships and economic development at ORNL, who was helping teach a class at the Bredesen Center.
“He saw that what I was doing in that class was interesting for me, and so he encouraged me to continue thinking about it or look for opportunities to work with other people on it, or if I wanted to start my own business,” Bova said. “As I went on, I went to Startup Day a few times and I kept seeing the same faces. That really encouraged me because I realized that Knoxville wasn’t huge like the Bay Area with Silicon Valley and all that. I kept recognizing the same people and having some of them recognize me just by showing up to some of these events.”
At KEC, Bova attended the CoStarters workshop, an eight-week program that goes from an idea to a pitch and includes everything in between.
“And since we have started winning some of these (business plan) competitions, there has been a ton of support in all regards,” Bova said. “Stacey at UTRF has been really helpful. She has met with me to talk about what does means it to me as a student who is working on this stuff as my Ph.D. to also start a company and help me understand how to manage that conflict of interest while encouraging me to continue going forward.
“Everybody is excited about what we’re doing, but I’m really excited that they’re so willing to offer advice freely and that there’s programming being set up. The most exciting thing for me is that, even since I first got here, that blanket of support has continued to grow bigger and bigger. Now we have Innov865 Week. And all of those parties are really making it apparent that all those companies coming out of Knoxville have been the main driver of that.
“To be a part of that, even though we are very new, it’s exciting to say that we’re part of this explosion of entrepreneurship in the Knoxville area.”
Knox starts here
The Knoxville Entrepreneur Center opened in 2013, and Biggs became its executive director in January of 2014.
Biggs spent 20 years in San Francisco, where he primarily was the director of business solutions for Essention Group, a Bay Area software consulting company. A graduate of Yale University and University of California Law School, Biggs started his career as a member of the California bar by serving as in-house counsel for the U.S. Customs Service before moving on to pursue his passion for working with new and emerging businesses.
According to the KEC website, its mission is to build a community where entrepreneurs have access to the capital, customers and talent they need to be successful. Its tagline is “Knox starts here.”
It should be no surprise that the KEC has helped Knoxville’s entrepreneur community build a tremendous amount of momentum.
“Knoxville is less self-conscious than it used to be,” Biggs said. “When I first got here, the story was all about ‘Why aren’t we Chattanooga? Why aren’t we Nashville?’ To me, it was surprising, because there was so much going on that I saw as an outsider coming in that I don’t think Knoxville initially appreciated.
“In the last couple of years, I think I’ve seen much greater recognition of the amazing things that are happening here. The vibrant startup culture that is here. The amazing maker culture that is here, evidenced by 400 people showing up for an event. I think people are both recognizing how much Knoxville has to offer and they’re starting to message that a little bit better. They’re actually willing to brag a little bit about the things going on in our community, rather than just lamenting that we’re not Chattanooga. There’s still a long way to go in some ways, but I think there has been a lot of progress on that front.”
Biggs said there also is a much more integrated and intentional effort to collaborate, both among organizations that support entrepreneurs and entrepreneurs supporting each other.
“You see more experienced entrepreneurs looking for opportunities to mentor new, upcoming entrepreneurs,” he said. “You see younger entrepreneurs who are looking to each other for guidance and advice and support. That, to me, is a sign of a really high-functioning community, where the entrepreneurs are actually the ones that are leading that community, that are looking to each other to be resources in addition to looking to institutions and nonprofits, and other people to be resources. I think that entrepreneurs are starting to lead this community (and that) is a really significant accomplishment for all of us.”
Bova said working with KEC has been important to his business. In fact, his advice for anybody wanting to start a business in Knoxville is to get all their thoughts on paper then set up a meeting with someone at KEC.
“Whether you talk to Jonathan (Sexton), Joy (O’Shell) or Jim, they’ll sit down with you and look at what you have and then they would likely do what they did for me and introduce you to somebody to help you get to the next point, someone like Shawn Carson,” Bova said. “If you have an idea, look at all the moving parts. You can put that on paper. That was the most important thing for us. It showed me that we didn’t have to have a ton of experience. It showed me within an hour or so if we could do this. Even if I didn’t know who would be those pieces, I could at least see.
“Their goal is to teach new entrepreneurs. Being afraid of ‘I can’t do this’ or ‘It’s going to cost me all sorts of time and money,’ that’s daunting. All the people with the answers are here.”
Alsobrooks said that one of the things the KEC does is host a “ton of meet-ups.”
“Two or three times a week, they have some sort of group, whether it’s coders or startup businesses or classes or mentors,” Alsobrooks said. “They have a contest called ‘What’s the Big Idea?’ once a year where they award (money) to the winner to invest in the business. They have all sorts of things happening there.
“The startup community in Knoxville exists to the degree that people want to step into it. If you want to isolate, you can, but you don’t have to. If you show up for those sorts of events, it’s there. You’ll meet people on the same journey, on the same road. You’ll meet people at KEC and chamber that want to help you. It’s like anything in life, you have to show up.”
Collaboration has become the norm for the Knoxville entrepreneur community, but challenges remain.
“One of the challenges we have had is the availability of funds and capital,” Clayton said. “That’s getting better. Behind the scenes, there’s a good, vibrant entrepreneurial community out there. KEC is trying to help that and grow that.”
Alsobrooks agreed, saying he would like to get involved or start “something like micro financing for Main Street-type of businesses.”
“You know, $1,000 to $5,000 can be a lot of money, but it also can be the amount that can set (someone) over the edge of they can do it or they won’t have money to do it,” Alsobrooks said. “I would love to explore the idea of teaming up with some creative people or entrepreneurs and maybe we start a fund that help …
“Maybe we pick six or seven area businesses a year that we love, that we believe in, that we want to mentor, but not just mentor, but invest in this. I love that idea. … Knoxville can use that.”
Patterson said that the area needs more investors, people who are willing to take a risk.
“Entrepreneurship and starting a company, it’s hard,” she said. “There are lots of needs. Some needs we have in this area. We need more capital. … These things are typically early stage and a lot of them don’t make it to the end. But the ones that do, as I’ve said, pay big dividends, big returns. We need more investors. We also need more entrepreneurs. The people who have done this before, to help mentor the younger ones, the ones in the graduate program. Bredesen Center students have an opportunity to either choose a policy tract or an entrepreneurship tract. About 35 percent of those students are choosing the entrepreneurship tract. And they will tell you, they want to start a business here before they finish their Ph.D.
“Well, they’re young, they’re at the right time of their career, they’re really smart and capable, but they need some mentors, so we need some people who have done this to step up and help these young entrepreneurs realize their dreams. Just by sharing their story, just by sharing some business tactics. Just to be a phone call to answer a question, those kinds of things.
“I think those are a couple of things that we need. I think we’re a very technology-rich region. I think we have a lot of really smart people, but everybody always needs more capital and we need this mentor network to grow.”
The University of Tennessee, Oak Ridge National Laboratory, affordable cost of living, mountains, rivers and southern hospitality help make Knoxville a desirable destination for entrepreneurs.
Brandon Bruce, the CEO of Cirruspath, came to Knoxville from Southern California. He has said publicly that his company would not be the success that it is if it hadn’t come to Knoxville.
“We’ve benefited tremendously from the support of the local business community — the Knoxville Entrepreneur Center, the Knoxville Chamber of Commerce, the UT Research Foundation, the Oak Ridge National Lab and many other organizations that make Knoxville incredibly business-friendly,” Bruce said. “It’s great to live in a place where you can work hard and play hard. We can access the Urban Wilderness trail network for mountain biking and running; hundreds of miles of rivers for boating and waterskiing; and the Great Smoky Mountains National Park for backpacking and fly fishing.”
Biggs said access to UT and ORNL, and the people who are there, is a really important facet.
“The lab is an incredibly unique thing to have here, and so is the university,” he said. “I think they bring not just the intellectual property to develop, but they bring a wealth of really, really great people. And some of them become motivated to take an entrepreneurial tract. Not all of them, but enough of them that you see some real significant opportunity there.”
Then there is Knoxville itself.
“It is a great place to live for a variety of reasons. The cost of living is phenomenally good,” Biggs said. “When I came from the (San Francisco) Bay Area, the differences in being able to raise a family here were striking. You’ve now got a growing and very vibrant downtown community, which didn’t exist even seven or eight years ago, which means you bring with it amazing coffee shops, amazing music venues. You have little craft breweries popping up. All of the sort of tell-tale signs, in my mind, of what makes a community someplace that people want to live.”
Alsobrooks said that the revitalization of downtown Knoxville was a key development for the entrepreneur community.
“People moving downtown, working downtown, that sort of compresses the creative juices,” he said. “It’s more dense now. You have the opportunity to bump into people. I think an urban core is key to that. It can happen in suburbs, but it’s much harder. It’s a different feel out there. A lot of the new areas of downtown, the buildings that have been redone, and the new businesses that have come into them, I think that’s huge.”
The revitalization of downtown also meant more culture. Biggs attended a presentation by the Kauffman Foundation on the first day of Innov865 Week.
“They said that in most successful entrepreneur communities, culture comes first,” Biggs said. “It starts with something like Sundown in the City, or it starts with the Dogwood Arts. It starts with a cultural movement that makes this a place people want to live. Or, you know, it starts with it being an affordable and interesting place to live. That’s not a knock on Knoxville that it is affordable. That’s a real asset for the community. But there has to be more than just affordability.
“As Knoxville’s culture has started to really shine in terms of the opportunities to do things here, I think you’ve started to see more people who want to live here, or stay here, look at entrepreneurship as the opportunity to do that. I think the livability, you can’t really underscore not just the cost of living, but the accessibility to the outdoors and recreation to the good schools that you have here. There are a variety of reasons why I think this is an appealing community. I think that drives a lot of interest in doing entrepreneurship. Couple that with access to world-class technology and people, and a history of some entrepreneurship.
“I think sometimes we forget that we have some incredibly successful people who have been the stalwarts of Knoxville for a long time. I think those three legs in the stool make for a very, very compelling place to start a business.”
Alsobrooks said that Knoxville is on the verge of an entrepreneurial explosion, so to speak.
“I’ve started three businesses since I’ve lived here in Knoxville. They all have been really supported by the city, by our neighbors,” he said. “I think if you have a passion for your craft, and you want to do something well, I think Knoxville is at that level of where we don’t just want the bear minimum of options anymore. We want good stuff, we want creative stuff. We want passionate people.
“I think there is a lot of energy. If you fit into that category, the support is huge. The support as far as customers, and resources like KEC and chamber, people want it and the city is primed for it. … There’s so much opportunity to do cool things in cool places in a cool city. … It’s ready.
“It’s like a firecracker. All you have to do is light it. It’s ready to go. I really believe that.”