New venture strategy for Nashville

It is not too strong a word to say that entrepreneur Mike Shmerling hates getting as much media coverage as he does, personally. He would rather more attention be given his operating companies and new ventures like "Mayberry's Finest" foods, which is marketed using the leverage of the CBS-controlled franchise of "The Andy Griffith Show." Well, if Mike wants to avoid the spotlight, he's going to have to quit producing such good ideas as the one we report on this morning over at VentureNashville.com. It's a potentially game-changing strategy for spawning startups that are likely, over time, to produce the kind of family tree we're all familiar with in the healthcare sector. Read the full story here.

VU Profs argue Private Equity more vigilant in new financial world

Over the weekend, two Vanderbilt University professors updated their report, "Does Private Equity Create Wealth?" The study from Owen GSM Prof. Ron Masulis and VU Law School Prof. Randall Thomas reveals that boards of directors and management teams in companies owned by private-equity funds have advantages over public companies when it comes to monitoring financial risk and performance. Say the authors, PE execs "can do a better job of monitoring of derivative transactions and derivative contract positions than their public company counterparts..." They explained at another point in the 56-page report, "Unlike public companies, boardroom activity in [leveraged buyout] firms is less concerned about regulatory compliance, committee work, and process... There is better information available to top management and board level because of initial extensive due diligence and because of the more intense operational focus... Moreover, there is a different social dynamic on the board, so that anything can be discussed and all assumptions are subject to reconsideration...." The paper offers an interesting discussion of management incentives to create shareowner value. Masulis' research is focused on M&A activity and corporate governance. The 56-page Masulis-Thomas report is here (pdf).

TTDC names chairman to succeed Marcum

Venture Nashville reports this morning on the appointment of Bill Evans (at left), who is CEO at St. Jude's in Memphis, to the chairmanship of the board of Tennessee Technology Development Corporation. Evans takes the reins from Dan Marcum, founder of Marcum Capital in Tullahoma. A specialist in the field of pharmacogenomics, Evans will work with TTDC CEO Eric Cromwell in leading the state's push to expand the knowledge-intensive, high-growth sector of the state's economy. The full story is here.

New man at Owen Entrepreneurship Center

Byron Smith (left), the longtime chief marketing officer of Nashville-based Asurion, will succeed Bruce Lynskey as clinical professor within the Owen Entrepreneurship Center, under Director Germain Boer. Our story this morning provided details of Lynskey's move to a Massachusetts tech startup and Smith's background. We'll be watching this space. If you've missed Bruce's sage observations over the past six months on The VN Blog or over at VentureNashville.com, you might want to peruse them.

Concerned Telcos, Songwriters rally in Nashville

Any uneasiness we had about having been a too skeptical of Arts+Labs' claims here this morning that it won't be lobbying were largely dispelled by subsequent reports from trade media today. Not that lobbying is a bad thing, but upfrontness when talking about public access to Internet-Broadband seems more important. The AT&T-weighted coalition's Nashville briefing for news media was at The Hermitage Hotel this morning, and included former Clinton, Bush and McCain spokespersons. That's former Clinton White House comms director Mike McCurry at left. Here's our story this morning. And, here are stories subsequently posted by Washington Post, Wired, DSL Reports and InternetNews.

NCN Angels invest in The Restaurant List

Green Hills-based Solidus Co. and Nashville Capital Network recently announced completion of a $1.6 million startup round of funding for The Restaurant List Co., which was co-founded by Nashville entrepreneurs Jeff Gould and Marc Fortune (left) to provide hotel guests information about area dining and entertainment. NCN's release said TRLC is preparing to launch in Nashville and plans to be operating in "at least five Southeast markets" by the end of 2009.

BusWeek writer: Memphis more entrepreneurial than NV

According to Sunday's Commercial Appeal, Sarah Lacy (at left) -- the San Francisco-based BusinessWeek "Valley Girl" tech columnist and author of Once you're lucky, Twice You're Good: The Rebirth of Silicon Valley and the rise of Web 2.0 -- told a tech audience in her native Memphis last Thursday that she thinks Memphis is "more deeply entrepreneurial" than Nashville because Memphis is a "town of people just getting by." The former Memphis Business Journal reporter said Memphis exemplifies the "scrappiness and creativity" needed to succeed in Web 2.0 and beyond. Host for the gathering was LaunchMemphis, a business incubator.

Tennessee ranks in Tech Trade globally

According to a report released today by the American Electronics Association (AeA), Tennessee ranked 10th in overall high-tech exports, with $4.8 billion in value, up $300 million over 2006. The state trailed, in rank-order: California, Texas, Florida, New York, Massachusetts, Arizona, Illinois, Oregon, Minnesota. Tennessee was the nation's second-largest exporter of electromedical equipment, ranking behind only California with $1.6 billion in exports in the sector, about half of California's sector total. Read more, right here.

Bought out of bankruptcy, IdleAire seeks CEO

Knoxville-based IdleAire Inc. has a laudable concept that takes on added lustre during the current fuel shortage: Hook truckers' cabs (left) up to AC, TV, Internet and other comforts, and shut off those idling motors that waste fuel and leave sleeping truckers grumpy. Nonetheless, rapid growth, debt service and some management gaps led IdleAire into bankruptcy earlier this year, owing more than $300 million and having cranked operating losses totaling more than $150 million in the past two years, alone. As it attempted, ultimately unsuccessfully to stave-off bankruptcy, IdleAire was forced by lenders to retain turnaround specialist CRG Partners, an international firm HQ'd in New York City. Post-bankruptcy, CRG answers to a cluster of six investment-advisory and -management firms, who, in turn, represent the actual investors. CRG was previously credited with the turnaround of Knoxville-based Regal Cinemas. IdleAire has more than 130 sites and serves rigs operated by more than 1,600 fleet operators. The company's 2007 revenue was about $31 million, but that record sprang from a massive increase in overhead in network overhead. Trying to grow its way out of failure helped seal the company's fate. CRG is actively recruiting a new CEO with industry experience. Other key management slots may also turnover.

Should NV adopt Wall St. tossed execs for Startups here?

Absolutely one of the most interesting reads is underway at several venues regarding how smart it might be to hire some of the 'best and brightest' left homeless by the Big Apple-centered financial meltdown. Some Nashville tech execs and VCs complain we need a deeper gene pool here. Some well-intentioned bloggers are encouraging the migration of talent from the financial sector to relocate tri-coastally. At these sites you can read the often biting -- No, make that "acid" comments, and some sympathy from tech and other execs on this brainstorm. Is this really a wrongheaded strategy for ruining not only Silicon Valley, but the emerging NVTN tech community? Lots of comments at The New York Times. More details at Startuply.com, LeaveWallStreetJoinAStartup.com and AVC.com. Penny for your thoughts.

Middle Tennessee RHIO gets legs at last

Though it's still pretty much on the drawingboard, key Middle Tennessee healthcare providers today officially announced their commitment to what is now branded the Middle Tennessee eHealthConnect regional health information organization. Key executives, who signed a memo of understanding months ago, include Dr. Reginald Coopwood (left), CEO, Metropolitan Nashville Hospital Authority; James Houser, CEO, St. Thomas Health Services; Larry Kloess, CEO, TriStar Health System; and, Dr. Martin Sandler, associate vice chancellor for Hospital Affairs, Vanderbilt University Medical Center. The group's release this afternoon indicated MTeHC will collaborate with the Governor's eHealth Advisory Council, as well as with MidSouth eHealth Alliance in Memphis, CareSpark in upper eastern Tennessee, Innovation Valley Health Information Network in Knoxville and the statewide Shared Health network. Vicki Estrin from the Vanderbilt Center for Better Health (VCBH) will help the group become operational. Also, Tennessee Hospital Association President Craig Becker involved helping the new group create a nonprofit organization to pursue the RHIOs mission.

Tech2020 names Cuddy President-CEO

Oak Ridge-based Technology 2020 announced today the appointment of Mike Cuddy (left) as president and CEO, succeeding Tom Rogers, who joined Oak Ridge National Laboratory. Cuddy served the past decade as VP-IT Services at SAIC, one of East Tennessee's largest employers. Earlier, he supported the Department of Energy’s missions in Oak Ridge, working for 30 years with Union Carbide, Martin Marietta, and Lockheed Martin Energy Systems. Cuddy earned his bachelor's in mechanical engineering and an MBA in finance and operations research at UT. Cuddy and his wife Carolyn live in Knoxville, where she serves as the Executive Director of the UT Center for Executive Education Leadership and Executive MBA Programs. He starts at Tech 2020 on Oct. 6. The search was conducted by The Buffkin Group.

'M&A Lies'

In addition to the observations we reported this morning from the M&A conference underway here in Nashville, there were dozens of other cogent remarks by panelists -- for example, regarding the human impact of acquisitions: A spoofy brochure from Deloitte, titled "M&A Lies," was used by a moderator to poll panelists on how much credence an employee should give a new Private Equity owner's promise that "We keep most of the people we want to keep when we do a deal." That drew dark chuckles. Bryan Cressey rued the fact that while he says his firm does "try to take care of employees" in a transaction, many times he's seen top management "take transactions that hose the employees... where the owner-slash-CEO didn't really care." And what about the caliber of management getting top priority? Yes and no. Said Cressey, if you have to choose between a great management team in a bad sector and a "sorta average" management team in a great sector, "take the sector." Fellow panelist Jeff Rhodes of TPG Capital chimed in knowingly, "When a 'good' management team meats a 'bad' sector, it's the sector that keeps its reputation." By the way, there was general assent to the idea that in the current financial environment a CEO who got his job on the basis of the "growth" he or she could create probably now finds themselves spending their time managing the company's capital structure. Also, although liquidity's a challenge in some sectors, deals that involve companies with decent credit and "a clear story" are still getting done. With regard to struggling companies, look for spinoffs and carve-out startups. Read our report on prospects for health, IT and related investments here.

TN BIO's Rolwing

Our story yesterday on 'Bionic Woman' Leslie Wisner-Lynch's role in advancing biotechnology in Middle Tennessee -- with observers' comments on the industry's halting progress -- drew a crowd. Not mentioned in that article is the fact that Tennessee Biotechnology Association is getting by with basically 75 percent of an executive director: TBA Chairman and President Bob Acuff told VNC he hopes the organization will soon be able to afford 100 percent of Executive Director Joe Rolwing's time. That's Joe at left in the adjoining photo, talking with a student during a recent TNBIO Student Chapter event (there's another scheduled Sept. 22). TBA contracts for the indefatigable Rolwing's services from Cumberland Emerging Technologies, the incubator that's controlled by Cumberland Pharmaceuticals, Vanderbilt University and Tennessee Technology Development Corporation. Rolwing was only half-time a year or so ago. The balance of his time is apparently still spent as director of the CET Life Sciences Center.

ISIS: Software as Science

At 9:25 a.m. next Friday, Sept. 19, Janos Sztipanovits will attempt to summarize in a few minutes the past, present and future of the extraordinary Institute for Software Integrated Systems at the School of Engineering, Vanderbilt University. If that feat, alone, isn't enough to attract your attention, browse through some of the most important projects underway in the software world today. The occasion: ISIS' 10th Anniversary. As reported earlier on the VN website, ISIS and its chief will soon also be host here in Nashville for a major meeting of computer-language researchers and developers.

Metro, Affiliated Computer ask $1M settlement approval

Metro Government and Affiliated Computer Services have reached a settlement agreement in their 3-year dispute over a $1.9 million software project that was to modernize handling of Metro traffic-violtion cases. Software provided by ACS didn't work. Metro will accept a $1.1 million payment from ACS, if Metro Council approves the resolution sought by the parties, Sept. 16. News coverage 18 months ago included an ACS representative declaring Metro's lawsuit to be "without merit."

Emdeon files for $460MM IPO

Nashville-based Emdeon Inc. has filed with the SEC for an IPO to raise $460 million, according to Reuters this morning. The SEC Filing is here. Previous reports on Emdeon's efforts to broaden its policy influence and related coverage of revenue-cycle management. The SEC filing provides details of Emdeon's serpentine path through a variety of ownership and brand changes, the most recent earlier this month.

Arts Unchained

At Vanderbilt University, Bill Ivey (at left) is the former chairman of the National Endowment for the Arts, a former director of the Country Music Foundation and twice chairman of NARAS. Now, he leads the Curb Center for Art, Enterprise and Public Policy. In his new book, Arts, Inc., Ivey decries, among other things, that government, "as our agent, long ago ceded far too much authority over our creativity and heritage to a web of commercial interests." This is just the latest evidence of rising global awareness of the value of both creativity and the ownership of creative output. This came to mind when I spotted Microsoft's news this morning out of Amsterdam, where the company is unveiling a host of content-creation and -management tools with enormous implications for origination and preservation of intellectual property. Resources: Creative Commons. Electronic Frontier.

VCs putting money in HSA-Med Banking

San Francisco-based Canopy Financial and its HSA Insider division have gotten at least $23 million from VCs this year, so far, because folks are focusing on the intersection of healthcare and financial services. Here in Nashville, as reported today at VentureNashville.com, John Casillas has picked-up some early adopters in other states, but is finding it slow-going among Tennessee institutions. Mind you, revenue-cycle plays and e-health, generally, are getting plenty of attention in Nashville. If Casillas (and Canopy) are right, HSA's could soon create another surge in Health-related IT and governance, thereof.

Nashville ranking in 'Best Performing Cities' index

[Updated Sept. 13, 2008] Nashville ranks 22 of the top 200 major U.S. cities in creating and sustaining jobs and economic growth, according to a report out today from The Milken Institute/Greenstreet Real Estate Partners Best Performing Cities Index. In a separate index of 124 smaller cities, Kingsport, Johnson City and Jackson made the cut. Update: NBJ reported Sept. 12 that Nashville's employment total dropped from 25th to 36th place in America's 100 largest labor markets, although jobs in our market rose 10.9 percent in the past five years, versus the 6.3 percent national average.

Bredesen appoints Haslam to TTDC Board

[Updated 2:38 PM] Gov. Phil Bredesen today announced his appointment of City of Knoxville Mayor Bill Haslam to the board of directors of the Tennessee Technology Development Corporation. Haslam succeeded Tennessee Municipal League Executive Director Margaret Mahery, whose term expired June 30. Haslam is a member of TML, which is assured a TTDC by law. Prior to becoming Mayor, Haslam served as president and director of Pilot Corp., the Knoxville-based company operating convenience stores and travel centers nationwide. He was also CEO of SAKS Direct, the e-commerce and catalogue division of Saks Fifth Avenue. A TTDC source said the board still has three positions open. TTDC gets to appoint one of those three and Lt. Gov. Ron Ramsey will name the other two. This post will be updated as information becomes available.

Gloom and Tune

UPDATED 5:10 P.M. to provide more context on Jon Shayne's comments. In this morning's VentureNashville report, investment guru Bill Spitz of Nashville provides a sobering analysis of the ethos in which the mortgage-banking crisis has unfolded, and questions whether investors will ever learn to put some distance between themselves and lemming-like mob sentiment. Spitz raised the principle of the "Moral Hazard," often invoked by economists who worry that bailouts may encourage future reckless investing. In addition, markets analyst Jon Shayne here in Music City told VNC this morning he's working away on another song -- this one about the plight of Freddie and Fannie -- to follow Jon's earlier cult hit by his on-stage persona, performer "Merle Hazard." In another conversation late this afternoon with Jon, he noted that while the future of the economy is "inherently uncertain, it seems more likely than not that we're about to have the deepest recession of the lifetime of anybody now working."

Cornwall: 'Keep credit cards in your wallet'

Jeff Cornwall, the director of the Center for Entrepreneurship at Belmont University, isn't talking-down the importance of borrowing money, when that makes sense. If fact, he told VNC during an interview Friday, he works closely with some of the companies in the portfolio of Southeast Community Capital, on which VNC reports here. But, Cornwall (above right) told VNC that even though lenders' criteria have gotten tougher, entrepreneurs should "keep the credit card in the wallet." He said the tightening of credit and the "real shortage of true seed money" -- with many Angels and VCs moving downstream toward bigger deals -- provides further reinforcement for Cornwall's argument in favor of "bootstrapping." He said that "now that there's not money falling out of trees, most entrepreneurs have to rely on their wit and their craftiness" -- and that "plays right into" bootstrapping. Cornwall said he's passionate about bootstrapping because, "first of all...it's a critical skillset for all entrepreneurs" and those who create businesses need to "understand that this is going to be a major part of their ability to manage the resources they have," going forward, no matter the state of the economy. Bootstrapping, he said, can help avert crushing debt, minimize the need for partners, help companies survive between financing rounds, reduce the drain of personal energy and other resources, and generally help entrepreneurs "find a way to be the most efficient you can with the money that's at your hands." Cornwall's next book -- a textbook bluntly titled, Bootstrapping -- is due out soon from Prentice-Hall. No catchy subhead for Cornwall's book? "One word says it all," said the professor.

Get a handle on this Sci-Tech park thing

Oak Ridge Science and Technology Park recently held its groundbreaking, the first such development within the campus of a national science laboratory, a project managed by a community nonprofit organization. Earlier, of course, Chattanooga's Enterprise South Industrial Park got the nod from Volkswagen. Enterprise South is also home to such scitech ventures as E-Spin, a nano play. Over in Memphis, Memphis BioWorks and local institutions are pressing forward on the UT-Baptist Research Park, sure to be a magnet for innovation. Closer to home, Williamson County has the Cool Springs Life Sciences Center, anchored and driven by BioMimetic Therapeutics, with strong support from Vanderbilt and others. So far, nothing of the sort emerging in Metro/Davidson County. Proposals for redevelopment of the Metro Fairgrounds site drew arguments for mixed-use office-retail, entertainment (including keeping the State Fair there) and sports (Sounds baseball and the existing racetrack). Although there's another TVA Megasite up the road in Clarksville (Montgomery County), as previously reported in The VN Blog there are still no plans for a science-technology R&D park inside 530-square-mile Davidson County, yet.

Quanta Nashville and Dell's manufacturing exit

The Irish follow Dell Inc. more closely than we do in Nashville, because Dell does much of its outsourcing in the Emerald Isle. But, the news that Dell's plan to exit manufacturing -- reported today in-depth by The Wall Street Journal -- could have reverberations in Nashville, where Dell does some assembly and a great deal of logistics. Here's a much earlier Irish piece and this morning's ZDNet pointer. Not long ago, Nashville lost Gateway's short-lived presence here. However, Nashville is still the home for Taiwan-based Quanta Computer's very first U.S. manufacturing, service-repair and distribution facility. Could Dell's transition boost Quanta Nashville?

Caution: Synergies Ahead

Right about here, "the usual suspects" begin to get a little nervous. After all, another wave of "dialogue" is starting among economic-development officials, scientists, private-equity investors and others. Many of us are not entirely sure how to behave at this party. 'Will they respect my academic integrity and accept my lack of enthusiasm for commerce? Will they look on profit and commercialization as dirty words? Can they be trusted?' Tennessee Technology Development Corporation is going to great lengths to create in its Nov. 20-21 Tennessee Innnovation Conference an environment that is comfortable and productive for diverse actors. Back on campus at VU, Chancellor Zeppos has issued repeated assurances that continued funding of crucial academic inquiry will not be tainted by non-academic pressures -- other than to perhaps to demonstrate to scholar-peers the academic value of research. After all, there are only so many dollars to go around. What will result from all this? Time will tell.

People: Lawyer who kicked-off Nashville tech

Warren Ratliff (left) was 27 and an attorney leading the technology practice at Farris Warfield Kanaday (soon to become part of Stites & Harbison) when he put together Nashville's first supra-technology event in December 1999. Soon thereafter, Warren, now 36, became the first chairman and executive director of Nashville Technology Council, which was chartered in August 1999. The Yale Law, Duke poli-sci/history undergrad told me in an interview yesterday that the 1999 event attracted about 450 executives from virtually every part of the technology spectrum. From personal experience, I can tell you the energy in that hotel ballroom that evening was incredible, and the program was truly ecumenical, with healthcare, biotech, IT and other fields well represented. The gloom of the Dot.com bust was still faraway over the horizon, of course. Moreover, not long after the NTC's launch, Warren relocated to Atlanta, to launch a tech business with family. Yesterday, he repeatedly stressed how other local execs had played determining roles in NTC's launch, and declined taking much credit. (Today, Warren is chief counsel for McKesson Health Solutions, has a wife and three children, isn't currently involved in the Atlanta tech scene and doesn't get up to Nashville often.) Warren had, in fact, grown up working in his father's software-development business. David Condra, today once again CEO of Dalcon Communications, succeeded Ratliff at the NTC helm. After about five years at NTC, Condra was succeeded by ConduIT Founder Ray Capp and then incumbent Jeff Costantine. Costantine had not been retired long after two decades with HCA when he joined NTC, and he recently announced he's going to try at least semi-retirement again. The search for Costantine's successor is aggressively underway, with a selection likely to happen within 30 days. It's hard not to think wistfully of the heady atmosphere of those earlier days in Nashville technology. Maybe the NTC search committee can find that ingredient, too. -- Milt Capps

BioMimetic and Praxis talking?

Okay, there are probably circumstances that make this a non-starter, but here: BioMimetic Therapeutics, Middle Tennessee's primary life-sciences hopeful, told investor analysts during a Q2-results conference Aug. 11 that efforts to recruit needed numbers of patients for key clinical trials have lagged pretty severely since March. Summer vacations, the price of gas for followup visits and overall economic conditions that might reduce elective surgeries were cited. Analysts questioned politely, but repeatedly the recruitment effort, which management acknowledged is "the most important issue for our company." Then, yesterday, Brentwood-based Praxis Communications, which helps pharma and biotech companies recruit patients for trials, announced a new-and-improved version of PraxisDirect 2.0, a software-as-service tool for recruiting and managing patient data for trials. (As of this morning, Praxis hadn't posted their release on their site.) At a distance, 'inquiring minds' wonder how often such companies talk with one another.

ORNL energy innovation

Let's hope this is just the bow wave of a bigger funding for clean and renewable energy sources. On Friday, the U.S. Department of Energy announced in a release that Oak Ridge National Laboratory has gotten another $1.5 million to help "accelerate the movement of clean energy technologies" to the marketplace. Middle Tennessee's 'Mind2Marketplace' consortium will surely take note, given their aim of collaborating with ORNL and other Tennessee Valley actors. The latest stipend cannot be used for R&D, and must be used for prototype development, demonstration or actual deployment to market.

Lonely at the top

At age 41 and with seven-year-old Claritas Capital having proven its VC mettle, founder John Chadwick is a student of Tennessee's investment landscape. One lesson he'd like more people to grasp is the importance of building-out the state's venture ecosystem. It's not that he's tiring of being the only Tennessee fund in Entrepreneur magazine's annual ranking of early-stage investors, it's that a more vibrant venture community will improve Claritas' long-term prospects, along with everyone else's, and make it easier to justify staying in Nashville. After a series of wide-ranging interviews, our story is here.