Why the South Is Emerging as the Next Promising Growth and Innovation Hub

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After spending the greater part of my adult life as a California-based entrepreneur,  two months ago I moved my home base to Nashville, Tenn. It’s a place not too far from my fondest childhood memories that has all-at-once emerged from sweet tea and hot chicken obscurity to become the trendiest American city of the last decade. Blame Taylor Swift or ABC’s “Nashville” all you want; but music, entertainment, mind-blowing grub and Southern charm only scratch the surface of why this area of the country is making waves.

Companies like HCA, Dell, UBS and Vanderbilt are key employers, serving consumer and small business needs both nationally and internationally from Nashville; while organizations like Launch Tennessee and the Chamber of Commerce are working together to build a business-friendly environment for tech founders and creative startups across the state.

This means a diverse job market with a stable infrastructure where those with an entrepreneurial-spirit can partner up with larger organizations and community-based initiatives to jumpstart ideas and products.

Related: What Business School Will (and Won’t) Teach You About Becoming an Entrepreneur

The South, in particular Nashville, is poised to be the next entrepreneurial and small business frontier for several reasons, the least of which is a thriving economy with a handful of collaborative, creative leaders who are mapping growth well into the year 2020. This “Rise of the Rest” phenomenon, a concept being championed by none other than AOL co-founder Steve Case, is alive and well in the region.

After sitting down with a few folks from the Dell Small Business hub in Nashville, the Nashville Area Chamber of Commerce and Launch Tennessee, I firmly believe my gut instincts are spot-on. In an age where people want the advantages of a big city but the feeling of a small-town community, Nashville will continue to thrive and likely be a blueprint for not only other Southern cities, but perhaps other pockets of the U.S. that are struggling to retain talent, grow businesses and innovate their way into the digital age.

What are they doing right?

1. Diverse industry and population.

Nashville has an increasingly diverse population. From high-tech careers to entrepreneurs and workforce across sectors, the city has become a highly cosmopolitan region with worldwide name recognition for its economic vitality and career and business opportunities.

According to Dr. Garrett Harper, VP of Research for the Nashville Area Chamber of Commerce, “Some 130 languages are represented in the Nashville public school system, highlighting the increasing cultural diversity of the area; and since 2005, the Metropolitan Statistical Area’s population has grown by 25 percent, making it the 10th fastest growing metro area in the U.S.”

Beyond that, the city has a diverse industry mix led by key sectors such as healthcare, tourism, music and vehicle manufacturing.

“Several of these industries have a base in Nashville that leads the nation,” Harper added. “Music is a $10 billion Nashville industry with more activity than New York or Los Angeles (adjusted for population). The healthcare management industry is a $38 billion sector that employs over 500,000 globally, and tourism accounts for $5.42 billion in direct spending and over 13 million visitors each year.”

In terms of jobs, the region has added 170,000 jobs since 2010 for an overall growth of 21.6 percent, ranking 10th among large metros in the nation.

Additionally, Tennessee has specific programs for minorities and veterans in small business. The state is also working to make sure people in rural communities don’t get left behind by the economic boom in the big cities as evidenced in initiatives like the Governor’s Rural Task Force.

2. Small business support and investment.

Supporting small business owners and entrepreneurs — who are essentially “powering” local economies and providing job opportunities to a high percentage of any growing city — is one of the most important ways to ensure stability and future growth. Nashville’s Mayor, Megan Barry, feels so strongly about the role of small business in the community, that she created a position within the office of economic development to focus specifically on small businesses and the creative economy.

Additionally, some of Nashville’s largest corporations (all of which have global reach) are investing in, providing support to, and partnering with area startups and small businesses alike. Ultimately, giving them access to global resources and institutional knowledge to which they would otherwise struggle to gain access.

The Nashville Healthcare Industry Family Tree illustrates this philosophy in action. It showcases how the local healthcare industry, led by companies like HCA and Vanderbilt, has grown to a global footprint of more than 500,000 jobs and $78 billion in annual revenue.

For its part, Dell’s Small Business hub in Nashville (one of two Dell SB hubs — the other in Austin, Texas) has the specific mission to advise small businesses customers on the right IT to poise their business to “grow and thrive.” Whether customers have one or 99 employees, the small business experts on this team help organizations navigate through IT needs that can often hamstring early stage companies.

“Our approach to serving small business takes a page from the Nashville culture playbook: a big city with a small town feel,” said Erik Day, VP and GM Small Business at Dell. “We listen, address their needs, and then proactively help position their IT so that they are ready to grow, all while giving them access to Dell’s mother ship of end-to-end technology solutions.”

Related: The 10 Commandments of Business

3. Statewide collaboration and local community building.

Launch Tennessee’s Regional Entrepreneur Centers are a good example of collaboration across the state, which cross-utilize resources between six hubs and coordinate the curriculum, mentorship programs and accelerators at each of them. Each center has their own unique programs depending on the needs of the startup population. For example, through the Nashville Entrepreneur Center, Bunker Labs specifically focuses on veteran-owned startups.

“Our goal is to make Tennessee the most startup-friendly state in the country,” said Lindsey Cox, Innovation and Commercialization Manager at Launch Tennessee. “We’re seeing exciting companies come out of our accelerator programs at entrepreneur centers across the state. We’re deeply involved on the ground and are working towards a critical mass of entrepreneurial activity that will put Tennessee on the map as a startup hub.”

Chris Cotton, Director of Growth Initiatives for the Nashville Area Chamber of Commerce added, “Programs like ScaleUp Nashville are a great demonstration of community collaboration and focus on area businesses. Funded by the Small Business Administration and led by the Chamber, ScaleUp Nashville partners with the Nashville Entrepreneur Center, Pathway Women’s Business Center, Pathway Lending and Refinery Nashville to provide each cohort of growth-oriented small businesses the tools needed to grow revenue, build staff and expand services.”

4. Education and mentorship resources.

The Nashville region is home to 18 colleges and universities that enroll more than 110,000 students annually. Fun fact — that’s basically one higher education establishment for every two Starbucks in Nashville. Oh, and this translates to one in every 10 people likely investing resources into their education while simultaneously, and hopefully, future casting their life as key contributors to the local economy. Needless to say, to be a hub for innovation and growth, an educated talent pool is mandatory.

In terms of mentorship, Life Science Tennessee actually runs a statewide mentor network with Launch designed to support young life science companies. The ultimate goal is to help innovative researchers at St. Jude’s, Vanderbilt and The University of Tennessee commercialize their ideas and develop investor-worthy pitches.  

Dell Small Business hub also opens its onsite Solutions Center — which is regularly visited by small businesses and startups to demo technology — for kindergarten to grade 12 groups, giving early exposure and access to students interested in both technology and business.

Related: Are You an Entrepreneur of an Innovator?

5. Culture of artists.

While Music City may be best known for turning out greats like Patsy Cline and Johnny Cash, beyond the $10 billion industry exists an entire culture of artists. From writers and designers to filmmakers and culinary experts, the region’s musical roots have laid the groundwork for artistic expression and creative activity that rivals Los Angeles, San Francisco, New York and Chicago.

The rapidly expanding arts, entertainment and technology community is a key ingredient to why outsiders are drawn to Nashville, why people stay and ultimately what gives depth and color to the region.

To that end, the Tennessee Entertainment Commission (TEC) has recently launched Create_Here, a campaign to foster collaboration between the region’s creative class and tech talent. This is Tennessee’s first interactive sector program that prioritizes emerging creative technology industries including VR/AR, gaming, music and audio technology, digital production and distribution, education technology and animation/VFX. 

The proof is in the pudding.

As a lifetime entrepreneur and small business owner, I understand the nuances of environments that are ripe for innovation and growth and those that are not. The former require a cocktail of access to capital and talent, tax incentives, flexible leases, affordable housing, appealing activities outside work and ultimately an overall collaborative ecosystem where resources readily flow from organization to organization and person to person.

Contrary to popular, bureaucratic belief, operating in a territorial, silo-ridden environment doesn’t generally benefit anyone — except, of course, for those within it.

Looking outside those boxes, and the bubbles, is where we will likely find the next generation of innovators, founders and entrepreneurs who are just as invested in building strong communities as they are in building the next big thing.

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