A network of hard-charging startups has the potential to remake Nashville as the next big tech city 

Tech of the Town

Tech of the Town

In some ways, Marcus Whitney has the perfect Nashville tech founder story. It starts in a Mexican restaurant.

The day he arrived, Labor Day 2000, he was still wearing his uniform from Atlanta's Rio Bravo Cantina. He was visiting the Nashville location, and as it happened, the Music City outpost was slammed. The manager pulled up Whitney's information in the corporate system — checked out, looked good — and told him to get out on the floor.

He went home with $140 that day. Soon he was splitting his time between Nashville's Rio Bravo and Le Peep, where his attitude impressed the well-heeled Belle Meade clientele. "You seem like a smart guy," Whitney remembers a customer saying to him. "Why are you waiting tables?"

"See that over there?" he replied, pointing to a book about the Web language HTML. "I'm studying to become a programmer."

As fate would have it, the customer's last name was Frist.

Whitney started attending user group meetings, networking, and sharpening his programming skills. Eventually following a lead from one of his best tables, he applied for a job as a developer at HealthStream — a company run by Bobby Frist. He got the job in April 2001, a day after his son was born.

He worked there for a year — it was "a confusing time in the company," Whitney says — before leaving for an agency called Anode where he would meet formative challenges.

"The guy I replaced, I think, literally would choose another technology set for every single project," Whitney remembers. "So I walked in and inherited ColdFusion technology, this weird database called 4th Dimension, Microsoft ASP, PHP, Java — like, if there was a technology you could build a Web app on, he had done it. The server room had Windows, and it also had Linux, and it had — I mean, it was unbelievably exotic. ...

"I spent a lot of late nights when everyone else was gone, with the lights dim, trying to read all these books and understand all this technology that I did not understand. But I ended up learning it."

Flash forward to Oct. 23, 2012, a gala event at the downtown Schermerhorn Symphony Center. The occasion is the Nashville Technology Awards, and one of the night's biggest honors is Chief Technology Officer of the Year. Standing at the podium, facing the concert hall's grand tiers and sonically exacting fixtures, is this year's winner, Marcus Whitney. Within months, he'll have an even bigger prize — $5 million in Series B financing for his Nashville-based company, Moontoast.

As remarkable as Whitney's rise, though, is the number of peers now present to applaud him. Among the night's other winners will be Kate O'Neill. Her company [meta]marketer works with clients ranging from the Grand Ole Opry to Ingram Book Co. to optimize the way customers interact with their websites. Even the dazzling 20-foot video display that frames Whitney was created just blocks away, near the Entrepreneur Center on Broadway, in the offices of LMG Design Studio. Months before, LMG's Ken Gay had worked there perfecting Madonna's Super Bowl halftime show.

There too is Clint Smith, CEO of online email marketing company Emma. Maybe the most dramatic local tech success of recent years, Emma has gone national, with satellite offices in Portland, Ore., Denver, Austin and New York City. And yet Smith describes being at a neighborhood supper party a few years ago and having to explain what he does for a living.

"Oh, you mean like a Constant Contact or an Emma?" his neighbor asked — assuming Smith's office must be some lesser local version.

"It's funny," Smith says, "the assumption that [we] were in San Francisco or somewhere like that."

But he's not. He's in Nashville, where a close-knit — some might say incestuous — community of local tech pioneers has risen through the ranks. A new generation of small, nimble companies is bubbling up across the city, staffed by skeleton crews of obsessive coders and CEOs crazy enough to believe they can build the next big thing. They talk in a patois of acronymic geek-speak, venture capitalist jargon and affirmational sloganeering. The names may be unfamiliar to many Nashvillians — Cardagin, Evermind, Kiwi, Waffle, Zeumo — but their ethos is not.

They believe Nashville has what it takes to be a great technology city — and moreover, it's a point of pride. Scroll to the bottom of Populr.me, and you'll find a tagline more likely to be inlaid on a guitar or stitched on a bespoke tie than displayed on a website specializing in HTML5-based micropublishing: "Proudly made in Nashville, Tennessee USA." And as more break through to a national stage, they want to see others join them, and extend what they've done.

For that to happen, though, the city will have to figure out how to keep and attract tech talents who, at the moment, are more eagerly courted (and more richly compensated) in established development hubs. And as Nashville shows an aggressive new focus on tech cultivation and recruitment, its tech community must decide whether it's worth trading some of the city's sense of mutual supportiveness for a sharper competitive edge.

The rise of Moontoast says much about the tortuous development of Nashville's tech culture. In the early Aughts, once he'd signed on with Anode, Whitney found himself on a small team that was basically a startup operating within the company. They developed a digital signage platform called FireSign, and made their first installation at the Frist Center.

click to enlarge Marcus Whitney - PHOTO: ERIC ENGLAND
  • Photo: Eric England
  • Marcus Whitney

"I didn't realize it, but it really kind of determined what my professional path was going to be," Whitney says, "into products and startup." After leaving Anode to start what he calls an "ill-fated" consulting firm, Whitney landed as one of the first employees at Emma. The company, whose name is a portmanteau of "email" and "marketing," had been successfully launched by dot-com-crash survivors Clint Smith and Will Weaver, and it was ready to grow.

"But the platform they had was built by an intern at Vanderbilt," Whitney says, "who, the legend says, they paid in beer." After Whitney helped completely rewrite Emma's system, Smith and Weaver offered better than a few cases of Natty Light: They made him a partner. He went on to help hire out the remaining technical team, and stayed on for three years.

Then came the tweets heard 'round the world.

Whitney was at South by Southwest in 2007 when Twitter debuted. "It was unbelievable," he says. "It was the first time that I got to experience mobile devices literally determining where dollars were going to go locally." That got him thinking in new ways.

"I believed that social was going to change the way that marketers worked completely," Whitney says. At the time, though, Emma was not in a position to capitalize. "The right thing for them to do was to solidify the business," he explains, and they did — only without their new partner. Over a tumultuous 60-day period in 2007, Whitney left Emma, which was now serving 10,000 clients; started his own technology company, Remarkable Wit; and separated from his wife.

"A very, very intense period in my life," he deadpans.

As Remarkable Wit was developing its client base, Whitney met two key figures, Joe Glaser and Bucky Baxter. Though known mostly for music — Glaser for his world-class guitar shop, Baxter as a first-call pedal steel player and former Bob Dylan sideman — they had an idea for a company that aligned exactly with Whitney's innovation thesis, which was: Social media would continue to grow; e-commerce would continue to grow; online marketing would continue to grow; and "somewhere in there, in that intersection, there was a great technology opportunity."

Glaser and Baxter collected angel funding, and Whitney began operating what was basically a startup within his own startup. In March 2009, Baxter and Whitney launched Moontoast at South by Southwest, the event that had, in a sense, inspired its invention. By summer 2010, the company would have $6 million in Series A financing secured.

What Moontoast does for a client roster that includes Big Machine Records and Lexus is create direct-to-consumer campaigns and in-newsfeed apps. That second part seems obvious enough — everything, including email signups and purchases, happens seamlessly inside the Facebook newsfeed, without requiring consumers to jump to an external site.

"It's very 'duh,' " Whitney says, "but still nobody's doing it but us." In fact, the "duh" aspect is the secret to a killer app, and the hardest to accomplish. The goal is something easy to use that masks its true complexity, thus making it difficult to copy or steal.

Later in 2010, Moontoast would open an office in Boston, with Whitney spending an average of 175 days a year traveling back and forth. The expansion led to speculation that Whitney was moving the company, a rumor he has worked hard to dispel.

"I've always been working for Nashville," he says adamantly. He has never forgotten that he landed a job his first day here, or that user groups at Cummins Station helped him learn and grow.

"I have a debt of gratitude to this city," he says. "My life is here. I moved my parents here. I've got two children here. I've got a fiancée here. My best friends are here.

"The other thing," he adds, "is that in order for me to have a great professional career, Nashville has to evolve as a startup city."

In a city notoriously resistant to change, that will be no small feat. But at least Whitney and his fellow Music City tech pioneers know what obstacles they face — and maybe how to overcome them.

By the time he sold it in 2007, Mark Montgomery's Echo Music had offices in Nashville, London, New York and Los Angeles, with clients ranging from Kanye West to Keith Urban. But in the Aughts, when he was pitching the monied classes of Nashville his fairly novel idea — targeted online music sales — he got mostly cold stares, or blank ones. He laughs remembering one incredulous response from a potential investor: "You wanna sell what on the where?"

click to enlarge Mark Montgomery - PHOTO: ERIC ENGLAND
  • Photo: Eric England
  • Mark Montgomery

To be sure, Nashville has come a long way since Montgomery started selling "what" on the "where" more than a decade ago. Even so, three key problems persist in the wider startup ecosystem.

First, there is not enough technical talent in Nashville, especially at the senior level — the level of experience needed to produce the simplicity Marcus Whitney cites as the grail.

"So you're better off trying to do something that's pretty damn difficult to pull off, but you make it feel simple," Whitney explains. "Well, guess what? That doesn't require junior and midlevel developers. That requires software architects and great, experienced engineers who've been there and done that and been through fires."

The Nashville Technology Council publishes a quarterly Tech Jobs Report, which typically lists anywhere from 800 to 1,200 unfilled positions in Middle Tennessee. "It's huge, and it's a challenge right now," says Liza Massey, the council's president and CEO. "What we have got to get really good at now is not just creating our own tech graduates and employees, but bringing them in."

Montgomery is more blunt: "I think we lack the technical co-founder and pure tech talent to really bring the market into a sort of nationally competitive realm." And as Nashville's profile has risen, senior talent has been recruited away.

"Corey Watson, who used to be head engineer at Magazines.com, works for Twitter," Whitney says. "Rick Bradley, he works for GitHub. ... I know that Facebook has approached developers in this market."

Second, not enough investment capital is going to small, risk-taking startups in Nashville.

"The deals are way better than they were, but they're still not there," Montgomery says. Part of that has to do with an old-money mindset. At meetings for Partnership 2010 — the Chamber of Commerce's economic development initiative, now Partnership 2020 — Montgomery says he told the "85 old white guys in suits" this: "Look, Nashville doesn't fund what it doesn't understand, and all it understands is health care services. And if you really want to be a national player, you've really got to start thinking outside of what your comfort zone is."

There's a reason that comfort zone is the shape and size it is. Landon Gibbs of the venture capital firm Clayton Associates explains it simply: "Historically, Nashville has been a health care community — people have seen a lot of success." And investors are in the business of succeeding. Part of the hesitance has to do with the kind of in-between area tech startups represent. Venture capitalists typically don't want to invest below $1 million because the math doesn't make sense for them: It's too much risk for too little reward.

Third, Nashville isn't generating enough big ideas.

Relative to other markets, Montgomery writes in a recent Tumblr post, Nashville is still producing "C-plus/B-minus ideas." And as the story of Clint Smith's neighbor demonstrates, even the really good, really successful ideas that originate here don't necessarily get associated with Nashville.

Whitney acknowledges all these challenges. But he says quality of ideas is not his biggest concern.

"The ecosystem is more important than the idea," he says. "When you launch a venture, you're starting with 5 percent true, true awareness of the reality of what this business could be, and 95 percent is uncertain. And over time, as you go to market, and you create, and you get the proprietary knowledge from sales interactions, you close in on something close to, I would say, 80 percent, at a max. ... In a strong ecosystem, you close that gap faster. You can adjust, and you're not so dependent on the strength of that initial idea."

Michael Burcham, president and CEO of the Entrepreneur Center, phrases it more tersely: "Good ideas are worth about 20 bucks. It's all about execution." Taken together, the obstacles are daunting, Montgomery believes, but not insurmountable.

"I think those things are all being worked on," he says, "and quite frankly, I think we're on year three of a 20-year continuum."

Or is that year six? Many, like Kate O'Neill, believe the spark really ignited over the course of 12 hours in August 2007, when Nashville's isolated tech community first saw the strength of its numbers. The setting was a crowded, bustling, "miserably hot" Exit/In; the occasion, the very first BarCamp Nashville.

click to enlarge Kate O’Neill - PHOTO: ERIC ENGLAND
  • Photo: Eric England
  • Kate O’Neill

The BarCamp concept of bringing tech-minded people together for an "unconference" was born in the Bay Area. While the first Nashville iteration didn't follow the rules exactly — against form, the event featured scheduled speakers, including serial entrepreneur and Brazen Careerist founder Penelope Trunk — it laid an important section of the tech scene foundation.

"The whole idea was to bring the community together," says Dave Delaney, a social media marketer who helped organize the first BarCamp Nashville along with Whitney (his recruiter to work at Emma) and O'Neill. "Many of them met for the first time in person."

That physical connection proved crucial. In that pre-Facebook, pre-LinkedIn version of Nashville, the bloggers, coders, entrepreneurs and marketers in attendance mostly knew each other only digitally through a network of blogs. Many were aggregated by the WKRN-hosted hub Nashville Is Talking, spearheaded by Brittney Gilbert and later run by Christian Grantham, who now works in the aboveground moonshine business. But meeting in person, at BarCamp Nashville, brought needed new levels of networking.

"That was a pretty key moment," O'Neill says. "It was such a great connecting point for the Web and digital thinkers in town who didn't have a physical venue." At the time, she worked as a Web developer at Magazines.com, sharpening the analytics skills she would use to start her own company, [meta]marketer. (O'Neill took the award for Social Media Strategist of the Year at the 2012 Nashville Technology Awards Gala.)

"Within a few years," O'Neill says, "there's a slew of geek-related opportunities — Firefly Logic Geek Social, the Nashville Geek Calendar." Add to that mix Podcamp (a content-side version of the BarCamp concept) and well-attended meet-ups around Ruby on Rails and other programming languages, and serious momentum began to build.

Opportunities for meat-space networking spread. Delaney's Geek Breakfast template — coffee and computers, basically — has been exported as far away as London and Johannesburg, and he continues to host the events in Nashville monthly. That a schism would develop, albeit briefly, in 2010 between social media- and marketing-focused BarCampers and those more interested in hard coding only showed how much the community had grown.

But if any company proved what benefit real-life social networking could bring to the city's nascent tech scene, it was CentreSource. An early (and ongoing) BarCamp sponsor, CentreSource helped modernize Nashville's technology infrastructure and vocabulary.

As founder Nicholas Holland puts it, "The open-source movement had not found a home yet in Nashville; on the flipside, it was roaring in tech centers like Silicon Valley, New York, Boston, Austin. We had early on decided to use the open-source stack." CentreSource was one of the first companies in Nashville to provide digital strategy for companies that, in many cases, didn't think they needed it.

"Our competitors laughed and said no one would pay for strategy," Holland recalls. "I don't know a single firm in town that doesn't charge for strategy now."

In 2010, .net magazine named CentreSource one of the top three design agencies in the world at a London ceremony. Here, it is just as well known for hosting Yazoo-fueled monthly events that draw upwards of 250 tech-minded Nashvillians — a forum where peers can blow off steam and toss around ideas. Yet even when beer isn't flowing, CentreSource has served as an important connecting point, thanks to Holland's allowing anyone to rent a desk in the company's collaborative workspace.

When relocated New Yorker Brian Daily, Jason Moore and former Nashville Technology Council president Tod Fetherling all started working on separate projects at the CentreSource offices, something interesting happened: They got to talking and realized their interests overlapped in important ways. With CentreSource as essentially their creative lab, they decided to start a company together. Stratasan, a cloud-based health care analytics company, launched in September 2010.

But if BarCamp provided what O'Neill calls a "gelling of sorts," the gel only spread so far. For Nashville's tech scene to take off, it needed more institutional backbone. That need ushered in the next major development on the city's tech front.

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