Friday, October 19, 2012

A tale of two cities, one of which being Nashville

At the behest of an "invite-only" nonprofit Germantown resident and Cool People Care President Sam Davidson, describes how Nashville is staking fresh claims on emerging, young-adult-oriented industry:

Nashville may be a bit new to the startup game, but it’s growing quickly. Having been known for primarily launching music or health care companies, it’s now growing tech companies, consumer products, and entertainment ideas.

Kudos go to organizations like Nashville’s new Entrepreneur Center, working hard under the leadership of Michael Burcham to provide incubation, knowledge, and pathways to funding for people with a great idea. Chapters like the local Social Enterprise Alliance are also helping to network and support entrepreneurs with a desire to make a profit while making a difference.

Top-notch schools like Vanderbilt and Belmont pump young talent into the local economy. Belmont offers a major in entrepreneurship too. Wonderful climate and affordable living are icing on the cake!

Not sure I agree that we have a "wonderful climate". This past summer was brutally hot, and our extreme storms seem to be more extreme than usual (the 2010 flood, a case in point). But that is not the point on which I want to dwell here.

Instead, I want to draw out a couple of things. One is that Sam evokes the name of the Entrepreneur Center, which almost exactly one year ago took up an extreme right-wing Twitter campaign and called upon Nashville entrepreneurs to protest the popular grassroots movement Occupy Wall Street. People are still scratching their heads over that one. That EC would veer to one extreme gives them less credibility in my book.

The other point is that the startup industry seems to dominate online buzz here in Music City, and the spin is constantly promotional and echo-chamberish. The reality at the moment is that the venture capital enterprise is contracting, spelling a belt-tightening future for entrepreneurs. Hence, the more heavily Nashville relies on startups, the greater the chance our economy will contract with it.

Compare Sam's glowing representation of a wide-open Nashville to The Atlantic Cities' consideration of "slow-and-steady" San Antonio, Texas shortly after that city's Mayor, Julián Castro, gave the key note speech earlier this autumn at the Democratic National Convention. It provides a more sober, chastened assessment about the economic diversity required for recession-proofing:

In our interview, Castro acknowledged that the bedrock of San Antonio's economy was not in bright shiny venture capital industries (in fact, the city's information sector is shrinking), but rather in safe and conservative industries that were largely non-cyclical, and therefore recession-proof. He further conceded that the city was blessed by the most uncontrollable factor of all: geography. "We've got lots of affordable land," he told me, which helps keep housing prices low. The proximity to the border creates a "constant supply of labor [that] feeds the hospitality industry" and keeps wage levels down ....

The upside of slow-and-steady growth is that when the world is falling apart around you, you look pretty good. In fact, San Antonio was perhaps the most resilient city in the 18 months after the crash precisely because so much of its activity revolves around government. The downside of slow-and-steady growth is that, well, it's slow. San Antonio is not a rich metro.

Nashville is not a rich metro either, a fact borne out by declining revenues for Metro services in spite of increasing taxes and the prospect of a budget crisis that a number of locals agree is immanent. Time will tell whether Nashville and its startups are more resilient than San Antonio. But naively buying sanguine assessments about the future of startups here may be self-deceptive and wishful.

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