BY THE 200TH ANNIVERSARY of Knoxville's incorporation, Oct. 27, 2015, East Tennessee leaders may know more about how their latest entrepreneurship push can strengthen the region.
That's probably as good a symbolic calendar target as any. For now, there are forces at work that are greater than symbolism, including dramatically rising interest in entrepreneurship, and possible changes underway in the entrepreneurial ecosystem of Knoxville-Oak Ridge.
Tech2020 President and CEO John Morris, 54, last week surprised many by announcing he'll end his tour with the nonprofit on Sept. 30, in order to return to the start-up sector.
VTC interviews with Knoxville-Oak Ridge influentials before and after Morris' announcement strongly suggest that Tech2020 -- and the venture community, at large -- were already facing an inflection point in their shared histories, requiring strategic adjustments, by all.
Tech2020 Chairman Tom Rogers told VTC over Labor Day Weekend that the executive committee of his board of directors will convene this week to discuss strategic priorities, CEO search criteria and the appointment of an interim CEO.
Discussions are underway with an internal candidate for the interim post, said Rogers. An interim appointment will allow the board time to recruit and thoroughly vet the candidates and the strategic ideas they bring to the table, he said.
Morris' announcement came as "somewhat of a surprise," said Rogers, who had in an earlier era served as Tech2020 CEO, himself. But, Rogers continued, the move was softened by having known from the outset that Morris was an entrepreneur who would eventually move on. Rogers praised Morris as having accomplished a great deal in his two-year tenure and for being "very, very collaborative." Morris took the job in 2012.
|CEO John Morris
Morris was most recently in the news as a leader in the formation of the Knoxville area's first Angel investor group, Lighthouse Fund, which has thus far raised at least $900K for its first Angel fund, he recently told VNC.
In addition, Morris confirmed in a recent interview with VNC that he has been discussing with Tennessee Valley Corridor (TVC) -- a regional economic-development organization -- a possible new or expanded initiative to improve flows of early-stage capital and other entrepreneurial support within the region. Morris said further discussion of these issues is likely during the next TVC board meeting. A TVC spokesman said that meeting is Sept. 10.
Whether a broad, Tennessee Valley-wide capital corridor materializes, or not, one source said informal talks have been underway some time among Knoxville and Chattanooga players interesting in carving-out "an East Tennessee-focused venture capital corridor."
Asked by VTC about the larger regional concept, Huntsville, Ala.-based Dick Reeves, the prominent founder of a series of Angel groups -- including his Angel Syndicates Central -- confirmed that he has previously discussed regional capital formation with TVC, Morris and others.
As significant as they are in themselves, Morris' initiatives also serve to illuminate the broader Knoxville-Oak Ridge landscape, and the gearworks beneath its surface.
Two sources said they believe Morris' efforts with TVC are, for example, complementary of plans by a loose-knit cluster of Knoxville-Oak Ridge actors who hope to trigger stronger action by Innovation Valley, or IV, an entity that is sponsored by the Knoxville Chamber, Oak Ridge National Laboratory (ORNL), the City of Knoxville and others.
In one scenario described for VTC, Innovation Valley would become a "super-chamber of commerce" that would represent an umbrella covering all major ecosystem participants. IV would take greater responsibility for sharpening strategy, defining roles, reducing duplication and coordinating among old and new players. If it did not shoulder this greater load, a new group or coalition could be formed for that purpose.
IV is an economic-development initiative of the Knoxville Chamber, and 13% of its $2MM annual operating budget is allocated for technology and entrepreneurship, according to IV Blueprint 2.0 strategic plan information online.
According to several reliable sources, the IV-centric scenario now being quietly advanced by one or more ad hoc groups calls for these commitments for key actors:
► Tech2020 would supposedly focus entirely on commercialization of technologies from local research institutions (ORNL, University of Tennessee, Y-12 National Security Complex and Tennessee Valley Authority), and might ally more closely with UT Research Foundation;
► Knoxville Entrepreneurship Center (KEC) would remain the steward of the community's "startup culture," continuing to serve as State accelerator grant contractor, outsourcing some functions to other players, as warranted; and,
► UT's Anderson Center for Entrepreneurship & Innovation, within the College of Business, would continue to provide services related to securing Angel investment, technology commercialization, education, training and mentorship.
There was near-unanimity among sources contacted for this story that an updated division of labor is sorely needed among East Tennessee stakeholder groups. Some strongly expressed the opinion that Innovation Valley is "on the spot," and must demonstrate agile and effective leadership in the next phase of the city's entrepreneurship, or be superseded in that role by others acting out of a greater sense of urgency.
There are apparently many other factors at play: For example, several well-placed entrepreneurs interviewed for this story described Knoxville's major actors as "cliquish" and out of synch with the requirements and culture of entrepreneurship.
One source also explained that in Knoxville, decision-making regarding new initiatives is often stymied by "vetting things to death." Excessive periods of analysis are viewed by some as needlessly slowing or deterring vitally needed change.
Most interviewed by VTC seemed to agree that Knoxville now enjoys a window of opportunity for course-correction. Yet, they said in various ways, that window could close, if the process of change becomes contentious.
It should also be noted that none of those interviewed for this story pretended to have a complete view of the situation, partly due to an oft-cited lack of transparency in the community.
Those commenting on background, rather than with attribution, seemed to acknowledge their own non-transparency, which they invoked in hope of achieving meaningful progress without triggering reactions by certain individuals or institutions. A political or military tactician might refer to such behavior as "stealing a march."
Knoxville Chamber EVP Rhonda Rice wears three hats: She is also chair of the board of the KEC, and staff leader of Innovation Valley.
She explained during a VTC interview that a strengthened entrepreneurship component has been an element in IV Blueprint 2.0's five-year plan since it was adopted in mid-2013.
Asked about allegations of excessive institutional influence in these matters, Rice said the Chamber and IV see the value of participation by both the institutional and commercial-entrepreneurial sectors, and all the city's assets should be "celebrated" and mobilized effectively.
The IV board comprises executives from some of the very largest institutions and companies in the region, and is chaired by Thom Mason, CEO of UT-Battelle, which contracts with the federal government to deliver ORNL research programs.
Speaking for the Administration of Knoxville Mayor Madeline Rogero, City Chief Operating Officer Christi Branscom said when asked for comment on Tech2020's CEO turnover: "The City of Knoxville continues to believe in the mission of Tech 2020 and the importance of its role in supporting technology commercialization efforts. I am confident that the Tech 2020 board will find a new leader to drive this mission forward and that John Morris will provide great value to any startup that is fortunate enough benefit from his involvement."
In an earlier interview for this story, Branscom said that with the continued development of the KEC the city has a "huge" asset, as well as strong leadership under CEO Jim Biggs, who joined KEC about nine months ago. The KEC opened in 2013.
Regarding the overall ecosystem, Branscom expressed confidence that each player will find nonduplicative roles that they can perform well. Branscom acknowledged that the region's long-standing reliance on UT, ORNL, the healthcare sector and other large institutions -- plus such factors as the region's topography -- have led to Knoxville being "a fairly insulated community."
Now, said Branscom, KEC and other actors can reach out to nearby rural communities, as well as to the urban core, to ensure that people with innovative ideas everywhere have a place to go for help. Broader engagement, Branscom said, will help ensure that some smaller businesses grow into the Scripps Networks, Regal Entertainment, Pilot Flying J and Clayton Homes of tomorrow. Such large companies contribute to the region's economic "stability," she said.
|KEC's Jim Biggs
The KEC's Biggs told VTC that he believes KEC can provide "connective tissue" and a "front door" for the area's entrepreneurial community.
Both Biggs and the KEC have had kudos! heaped upon them in the wake of KEC's MediaWorks Demo Day event, held Aug. 5.
In the course of two interviews with VTC, Biggs, who relocated with his family from San Francisco to Knoxville in 2013, made clear he sees things as less contentious, and more encouraging than many of those interviewed for this story.
Biggs said he thinks local actors "actually do work pretty well together"; and, he doubts there's need for a single person or organization to disrupt the status quo and spur innovation. He explained he senses there is at least tacit consensus that existing players can cooperate to "collectively shake things up."
He acknowledged there is some evidence that "Knoxville has a little bit of a mindset that is risk-averse, cautious, maybe even a little complacent," which he said is not surprising in an economy that has been "driven by large institutions."
Yet, Biggs said, in a sense "all of us are trying to be disruptive," in creating new partnerships; and, in shedding a frame of mind in which the community worries about the next high-profile business departure or failure, while neglecting to celebrate the community's successes.
Biggs said that while years-old departures of such firms as Whittle Communications and IPIX, and the rapid decline of such poster-child startups as Idleaire still represent sensitive spots in the city's psyche, those seem to be healing.
His observation may be supported by locals' largely favorable responses to investments in Knoxville firms that have recent been made by Chattanooga funds, related story here. As further evidence of Knoxville-Chattanooga affinity, for KEC's next event it is importing from Chattanooga representatives of Variable Inc., developers of sensor technology. Former Knoxville resident and now-Variable VP Alex Lavidge previously lived in Knoxville, where he was an early advocate for Knoxville entrepreneurship.
Biggs also credited Innovation Valley with working to create a "bigger tent" to encompass regional partnerships. And, he noted that Tom Ballard, a strategic development executive with Knoxville-based Pershing Yoakley & Associates (PY&A), the locally based healthcare consulting and analytics firm, has convened a series of meetings, each attended by varying groups of influentials, to explore related issues. ORNL's Rogers has also convened nonprofit stakeholders to discuss planning for this November's annual Knoxville Startup Day event.
Some in the community clearly believe that a single game-changing leader is needed, in addition to any 'collective disruption' that can be achieved.
Though both Biggs and Ballard are highly regarded in the community, according to some who were interviewed on background, neither has yet shown they bear the characteristics of a peculiar and important ingredient, described by one source as still absent in Knoxville: The "maniac on a mission" -- someone who knows instinctively what entrepreneurs need and how to help them get it.
PY&A's Ballard is deeply entrenched in his decades-old role as a boundary-spanner who has, thus far, retired from the executive ranks of both the University of Tennessee and ORNL.
Biggs, educated at Yale University and the University of California, and experienced in the software sector and in a prior startup, is getting strong marks for his intelligence, energy, collaborative style and more. Yet, several sources pointed-out it's simply too early to tell how risk-averse Biggs is, or how much range of motion he will enjoy from his vantage in the KEC, located on the floor beneath the Chamber of Commerce and IV.
Laurens Tullock, president of The Cornerstone Foundation in Knoxville, said he believes there has been real progress in the region's entrepreneurship sector.
Cornerstone, said Tullock, aims to support education reform and downtown revitalization, issues that can be more effectively addressed when community leadership and resources are well aligned, and when a healthy entrepreneurial culture has been established. Cornerstone backed a community research effort that in 2012 that produced a report in which entrepreneurship was cited among strategic priorities for the community. And, the foundation was among donors contributing to the founding and operation of the KEC.
Tullock told VTC, "My assessment is that we've got a growing alignment of the entrepreneurial support system in our region." He said he is "particularly impressed" with the pro-collaborative role of LaunchTN, in Knoxville and statewide. (LaunchTN CEO Charlie Brock serves on the board of the KEC, which, as the area's regional accelerator, receives an annual grant from LaunchTN.)
Tullock added, "I honestly do believe that for our region we've got unbelievable potential, but we just needed to get a lot of leaders who are passionate about the system [talking] with each other."
A number of sources suggested that overt, public discourse about disruptive innovations is underdeveloped in Knoxville, due largely to the resistance of some actors tied closely to the region's largest government and institutional employers.
"They're used to [one actor] taking over the space and running it," alleged one source, who added that such a mindset is seen by the entrepreneurial sector as retarding or stifling innovation. VTC notes that no one who was interviewed claimed that entrepreneurs, as a class, are free of their own dysfunctions.
Asked about the region's history of heavy influence by UT, TVA and ORNL, Tech2020's Rogers said, "I don't think we need to make any apology for that," given the crucial role of technology in today's economic development. "The more, the merrier," Rogers added with respect to any new efforts, now budding.
Rogers also emphasized that "my particular passion is technology commercialization," and he hopes that will remain Tech2020's focus.
As of this morning, the Tech2020 homepage touts its work in launching startups, helping secure funding and mentoring entrepreneurs. There's nothing visible, prima facie, on the website about tech commercialization, per se.
Though travelling, PY&A's Ballard said over the Weekend that he shares Rogers' hopes, telling VTC via e-mail, in part: "I believe Tech 2020's special play should continue to be in technology commercialization, helping both ORNL and UT, the region's significant assets. I hope that role is not just with start-ups, which has been Tech 2020's forte, but also manufacturers who can enhance their competitiveness through integration of new manufacturing and process technologies."
Asked how Tech2020, ORNL and others might overcome entrepreneurs' fears of getting involved in projects with technology risk and related intellectual-property challenges, Rogers replied: "From time to time we hear, 'Well, it's just too hard'."
Rogers said his response to that complaint is that entrepreneurs must "engage" more effectively with the technology-producing institutions. Meanwhile, he searches for entrepreneurs throughout the region who are capable and willing to undertake such engagement.
Venture Incite, a tech-commercialization startup that was based in Oak Ridge, recently folded its tent and decamped to Nashville, abandoning further commercialization efforts, as previously reported by VTC.
Asked his opinion regarding the challenging nature of technology commercialization, Venture Incite Chairman Vic Gatto, a partner in its VC sponsor, Solidus, first noted that the very complex issue is probably a topic more suitable for a Ph.D. dissertation.
Gatto then continued: "This is an issue for our entire country, not just for East Tennessee, and it represents both an incredible opportunity and something that is very hard to do, in reality. The necessary incentives and process for taking a technology that works at very tiny scale on the lab bench, under carefully controlled conditions, all the way to the marketplace is extremely complex. But, even more important, doing this requires an institutional mindset that leads to allowing talent people to dedicate a very large portion of their time to individual technologies' commercialization, with the understanding that payback may not come for decades, and not worrying so much over who gets the credit, et cetera. Creating that new model is a huge opportunity for one or more U.S. regions or institutions, and ORNL, UT and others in East Tennessee are as well positioned as others to create and share that new model."
Sounding a hopeful, but cautionary note, another source said on background, "I hope Tech2020 can downsize and find its niche and 'own' tech transfer like nobody else in the state!"
Reduced staffing and budget are likely to be in the cards for Tech2020, if that scenario becomes reality, said the same source, adding that it remains to be seen whether or not Tech2020 will agree to concentrate on commercialization, alone. VNC