I t’s hard to think of another economic activity that is cloaked in more mystique than startups — a gunslinger culture where someone puts everything on the line to pursue a dream. The successful ones achieve celebrity status and the unsuccessful ones live to fight another day. The perceived romance of startups is more often really bouts of stress and pressure punctuated by moments of elation and exhilaration. With Memphis’ rich history of entrepreneurs and startups, it’s no surprise they are held in reverence. The real surprise was that by the beginning of the twenty-first century, no serious ecosystem inspired or supported the births of new startups.
That did little to squelch the lofty rhetoric about the importance of startups to the future of Memphis’ economy or to temper images of a revitalized downtown where buildings were filled with new companies created by an active startup culture and the “creative collisions” that result from increased downtown density.
Today, the first glimmer of that downtown dream is on view through the picture windows on the second floor at Start Co.’s office on the northwest corner of Union and Main. The activity and the young entrepreneurs on display regularly capture the attention of visitors and residents on the corner often called ground zero for downtown.
It’s the latest chapter in a story that began modestly in 2006 with early experiments by Rhodes College graduate Eric Matthews to determine if the talent was available for an accelerator program focused on building good founders rather than good companies. A year later, he started Tennessee’s first co-working space, and in 2008, he organized his first Launch Weekends.
Just four years ago, Start Co. had one employee, Matthews, and $100 in the bank, and since then, it has raised $1.8 million in operating funds and leveraged about $10 million. Today, seven people work at Start Co. and about 150 “world-class mentors” are involved in its programs. Once teams are accepted into a program, each is given $15,000 in investor money and access to heavy-duty mentoring that leads to Demo Day, the deadline when teams have to execute their plans and prove that they deserve more money.
Today, things have improved to the point that Memphis was listed in recent months as one of the 10 best cities to begin a startup by CNN Money and one of the five best by WalletHub . Ultimately, the dream is to create an idea as powerful as the ones about an overnight air delivery startup that is now Tennessee’s largest private employer, or about the aftermarket retailer of car parts and accessories startup that now has 5,200 stores.
The potential impact of homegrown startups is proven dramatically by the tens of thousands of jobs created by household names like Fred Smith, Pitt Hyde, Bill Gates, and Phil Knight. In hopes of making this happen in his hometown, Matthews requires that teams participating in Start Co.’s accelerator programs of “money, mentoring, and marine-style boot camp” must move to Memphis for about six months.
Start Co.’s secret weapon is often Memphis itself. “Memphis has a cool factor to it,” Matthews says. “It has historical context and gravity. The team from Hungary knew more about Memphis than Memphians. It has strong brand equity. The business culture here is accessible and without pretense. In Atlanta, you can’t get a meeting, but you can here.”
Since 2011, believers in Start Co. stepped forward to fund the programs, but it is too soon to declare victory. “While it looks like the vestiges of success, we need way more help and resources to move ahead,” says Matthews. “We need more people and corporate engagement to tell the story.”
He adds that while success for Start Co. is defined by the number of startups that move through the ecosystem, for Memphis, success comes from the “direct injection of intellectual capital.” That’s why programs have evolved to include two themes pervasive in Memphis today: social innovation and talent.
“We’re recruiting talent to move to Memphis,” says Matthews. “We have people who have moved here from Hungary, New York City, Miami, and Singapore, and we have a 60 to 70 percent retention rate. Some of that social capital can change the community — talent, density, and entrepreneurship.
“There are tremendous social needs here and serious challenges. It’s community-based change and a different kind of platform, but it can lead to community interventions that lead to the disruptions that move Memphis ahead.”