SouthComm Reporter Responds to My Concerns on TNInvestco and Venture Capitalism

Nashville Post reporter and writer, E. Thomas Wood, responds to my previous post, where I quoted and queried him regarding TNInvestco:

Mike, I'm not the person at SouthComm best qualified to address your critique as a whole. I would like to respond, though, to your comments about my coverage of TNInvestco and your concerns about how my colleagues and I cover stories involving Solidus and its portfolio companies.

You are correct that my September story on TNInvestco did not address complaints raised by knowledgeable observers -- chiefly, that state-run venture capital programs grossly overcompensate the private entities that serve as conduits for the funding going to entrepreneurs and, theoretically, providing the state with an economic boost from the enterprises thus jump-started. I was unaware of TNInvestco until after the law was passed -- am not proud to admit my ignorance of what was an important legislative issue earlier in the year, but none of us can be everywhere.

In August, I began to read up on the history of Capco programs (the state VC model that eventually mutated into TNInvestco). I interviewed a Rutgers professor who has been the bane of the Capco firms' existence, Julia Sass Rubin. I gained a good understanding of why so many people consider these programs boondoggles. But the bill was already law at that point, passed unanimously by the legislature, and I would have accomplished nothing by rehashing arguments over whether it should have been enacted.

My job, as I saw it, was to look forward to the implementation of TNInvestco and examine just how prepared the state was to judge fairly between numerous proposals from highly qualified VC people. The main bar of my story, which you linked above, highlighted areas of concern in the planned approval process. In a sidebar, which you did not link, I put some of Professor Rubin's implementation concerns to ECD's chief talker, along with other questions.

I ought to note that I also fully disclosed NashvillePost.com's Solidus connection in the chart posted with the story.

Readers can draw their own conclusions after reading my full story package, but I feel I reported the story soundly and properly.

Now, just a word about Solidus. It has been the owner of NashvillePost.com since its founding a decade ago, and so there is a well-established track record you can look at as you wonder how evil an overlord it will be for SouthComm going forward. I would challenge anyone to produce a single example, from NP's freely available archives going back to 2000, of coverage bearing the imprint of inappropriate influence from the owner. NP has covered Solidus-related business dealings many times, just as it has covered the dealings of other local VCs. From its earliest days, it has always included disclosure statements with such stories so that people can be aware of the connections.

NashvillePost.com has published both good news and bad news about Solidus, its principals and their friends. When portfolio company Plumgood Food went out of business last year, we carried its obituary. When Solidus chief Townes Duncan was named in a $10 million wrongful death lawsuit last June, I reported on the complaint fully and, I hope, fairly -- even though I consider Townes a friend and have personally obtained VC funding for him in the past (a fact I disclosed, about which more in a moment). NashvillePost.com has published stories that deeply angered some of the most powerful business personalities in Nashville, many or most of whom are associates of Townes. Only long after the fact, generally, will he let drop in a casual conversation the fact that he fielded a blistering phone call from one of his buddies, hearing them out but backing us up.

Let me speak, finally, as someone who has both raised money from Solidus and worked for Solidus-backed enterprises over the course of the past decade. I arranged for the financing of the multi-author book John Egerton and I produced in 2001, Nashville: An American Self-Portrait. We (and by "we" I mean mainly Solidus) lost our asses on that high-minded venture, despite critical acclaim from Southern Living and the like. Not only has Townes Duncan not borne a grudge over that loss, but he hired me to help re-start NashvillePost.com in 2005.

For much of the next two years, he and I worked out of the same office. Both while the book was coming together and while NP was re-starting, brainstorming sessions with Townes repeatedly led to major improvements in the product. The guy genuinely cares about editorial quality in a way that fits into his worldview as a venture capitalist: He sees good content as a strategic asset, one rising in value as its competition becomes shoddier. I wish those who are concerned -- quite legitimately -- about SouthComm's corporate ties could spend a little time talking through the media future with Townes and Chris Ferrell, whose vision derives in part from Townes.