Within the past few years, the middle-Tennessee city of Chattanooga has garnered national press features, visits from top VCs, and placement on lists of top emerging startup cities.
But these headlines are made all the more remarkable by the fact that Chattanooga has a population of just 177,571. It’s a much smaller city than others vying to become bona fide startup hubs in the south, like Atlanta or nearby Nashville.
In fact, these bigger cities have a lot to learn from Chattanooga’s ascent and the way the city has successfully advertised its startup scene while being upfront about the challenges it still faces. This honest narrative has worked in attracting national attention not typically given to a city of Chattanooga’s size.
In 2010, spurred by a disappointing few decades before the turn of the century, Chattanooga became the first in the U.S. to offer gigabit-speed internet to all residents. The “gig,” with speeds 200 times faster than the national average, was the initial impetus that allowed a technology sector to emerge in Chattanooga.
Since Mayor Andy Berke was elected in 2013, he’s doubled down on the gig, boosting its top speed to 10 gigabits per second in 2015. He also instituted a framework for building an innovation ecosystem, studying other cities that had succeeded, forming a task force to address Chattanooga’s unique challenges, and establishing an Innovation District to encourage a density of technical expertise, energy, and resources in the city’s downtown.
“We punch above our weight,” Mayor Berke said in a phone interview. Chattanooga is currently seeing the highest wage growth for a mid-sized city in the country. In fact, 2017 census data showed that Chattanooga saw the highest growth rate among Tennessee’s four biggest cities.
Mayor Berke’s forthrightness is a hallmark of how he talks about the city. Despite the heady amount of press Chattanooga has received over the last year, the native Chattanoogan celebrates successes while acknowledging how far there is to go.
“Sometimes the CEO of a company is also the chief storyteller,” he says. But, “you should do it in a way that is not illegitimate. We want to be honest about where we’ve been successful so that we’re not just patting ourselves on the back for no reason … we want to acknowledge our struggles, but it is really important for us to talk about where we succeed so that we can continue to build on it.”
Addressing the downsides of development
While the startup scene has seen explosive growth, Mayor Berke is conscious that this new wealth isn’t spread to city residents equally. Though the 2017 poverty rate in Chattanooga hit a 10-year low, at 20.2 percent, it is still above the U.S. and regional average.
That’s why his administration has made digital equity a pillar of its development strategy.
One program, Tech Goes Home, is instituted by city-supported nonprofit The Enterprise Center. The program gives adults and children 15 hours of internet skill-building training in things like paying bills or applying for jobs online. Upon completion of the course, participants get the option to buy a Chromebook for $50.
“It’s all about making sure that more people in our community are not only signing up for the internet, but learning how to use it,” says Mayor Berke. The majority of program participants are families with young children and senior citizens.
Another city-instituted program, NetBridge, allows households with children on free and reduced lunch programs to access highly discounted high-speed internet. A few thousand families in Chattanooga can connect to the gig at “at the lowest price allowed by law,” according to Mayor Berke.
While many point to downtown Chattanooga’s revitalization as a sign of positive economic development, city officials are also conscious of the challenges posed by wage increases in the city’s densest areas — namely, the rising costs of housing, which not only affect current residents, but new entrepreneurs who are just starting out.
Chattanooga’s plan for its Innovation District — where most of the city’s startups are located — includes provisions for building mixed-income, student, and affordable housing nearby. At one point, developers who wanted to build downtown could receive incentives, but only if one in five of their units was designated as affordable.
“It’s important because people want to live near where they work,” he says. “In the innovation world where entrepreneurs don’t make a lot of money, having affordable units downtown is also a big piece of the pie.”
Workforce development is another ingredient in that pie. To that end, Chattanooga recently launched a city-supported technical bootcamp that provides scholarships to women and people of color.
Letting Chattanoogans tell their own stories
Another way that Mayor Berke has amplified the story of local startups’ successes is to let them speak for themselves. He often brings along a founder or executive from a Chattanooga company on his media tours and to reporter interviews.
Amongst those touting the city’s strengths as a startup hub is Luke Marklin, CEO of on-demand moving company Bellhops. In an interview with Hypepotamus last year, Marklin explained that as a service-oriented tech company, Chattanooga’s workforce has the customer-facing values he looks for.
“Many of our core values are built on that hospitality and the warmth that people want in a really good service business. And there is just not a better place to find it,” said Marklin.
Chattanooga also attracted some high-profile visitors to engage with its startup scene, most notably, investors Steve Case and JD Vance from the Rise of the Rest tour. The venture capital firm made Chattanooga one of its first stops on a nationwide journey to find high-growth companies outside of the coasts.
One Chattanoogan company that received a Rise of the Rest investment was FreightWaves, a logistics data analytics and media startup. CEO and founder Craig Fuller shared that he intended to allocate the initial investment from Rise of the Rest to attracting more top talent into Chattanooga, by providing relocation assistance for new employees and educational benefits to current employees.
“Like most cities around the country, getting tech talent is challenging, especially getting access to data scientists. The good news is that venture capital investments such as the Rise of the Rest and other investments can actually help to solve this issue,” he said.
And once new employees arrive in Gig City? “Chattanooga is a wonderful city, with a great life-work balance,” said Fuller.
With ambassadors like these, Mayor Berke’s job of being what he calls “head cheerleader” of Chattanooga becomes easier. And as the story of the city’s innovation continues to be told across the country, a multiplier effect emerges.
“As people see that we are succeeding, that helps us gather steam for the future,” said Mayor Berke.
Holly Beilin is the editor-in-chief of Hypepotamus, a publication that covers the Southern innovation ecosystem.
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