Chattanooga, known by its adopted nickname, “Gig City,” might not be the first place that comes to mind when you think of technology in the South. But with the fastest community-wide internet speed in the world and a whirlwind of activity in its startup ecosystem, it’s likely that more folks who previously only saw it as the original home of bottled Coca-Cola (sorry, Atlanta; facts are facts), Krystal burgers, and the Chattanooga Choo-Choo will soon board the proverbial train to the future in this fast-moving southeast Tennessee town.
Chattanooga’s public utility EPB launched the 9,000-mile fiber optic network in 2009 to power the city’s smart grid. Since 2010, the city has been providing customers with internet speeds of 1,000 Mbps, and began offering 10,000 Mbps speeds since 2015, currently available at $300 per month. That’s very fast, and not very expensive, which can prove a most attractive proposition to a bootstrapping tech company.
But what has Gig City done with such capabilities since The Gig, as the fiber optic EPB network is known, went live? I went to Chattanooga to find out.
Aside from visually stunning landmarks and amenities like the Tennessee Aquarium, the Walnut Street Bridge, and the Tennessee River running through the heart of town, Chattanooga is also known for its logistics capabilities. That appears to be continuing, with tech disruption.
Moving On Up
“We’re in a city that’s devoted to ensuring that technology is king,” says Kyle Miller, director of brand and communications at Bellhops.
Bellhops is one of the city’s biggest recent success stories. Founded in 2011 by a pair of then-recent college grads, the on-demand moving startup has raised almost $60 million since 2014, including a $30 million Series C in December 2018.
Miller says they’re based in Chattanooga partly for proximity to angel investor Dynamo, but also because of The Gig, whose affordability made doing business much less expensive — he estimates it would have cost eight times as much for high-speed internet in San Francisco that would be “still not as good.”
Miller also says being in Chattanooga early has been good for business and established the company as a standout startup.
“We were one of the first to jump in when the city was talking about investing in technology and building logistics tech in general. It felt like the right fit, and that’s one of the reasons our investors wanted us here.”
Miller says Bellhops has raised more money than any other startup in Chattanooga, and being based in Tennessee has garnered a lot of fundraising attention for the company, particularly its Series B and C rounds. He says more investors are looking to Middle America and the South, so they expect more funding soon, especially after growing from 25 to 70 cities in less than three years. By mid-summer, they will have launched in South Carolina, making the startup officially coast-to-coast.
“There is something to be said about success outside of Silicon Valley.”
Gigging With CO.LAB
J. Ed Marston, or “Jed” as he’s called, is Vice President at EPB. He can serve up the facts about EPB’s fiber optic network, the smart grid layered on top of it, and how it only takes seconds for the system’s 200,000 smart devices to identify areas with power outages, as opposed to hours.
Marston touts EPB ability to be a supportive partner on big local projects, like teaming up with the University of Tennessee in Chattanooga to build a mile-long corridor of connectivity near downtown for the development of autonomous vehicle technologies.
He says such capabilities have attracted national research partners to field-test new technologies. Through the Department of Energy, EPB is working with more than a dozen research institutions to identify best practices for smart power grid modernization across the country. EPB is also partnering with the National Science Foundation and others to make The Gig a platform for educational applications and healthcare delivery, with the goal of spurring entrepreneurial activity.
“It has made us the ultimate living lab,” Marston says of The Gig.
Marcus Shaw is CEO of CO.LAB, a nonprofit startup accelerator that partners with EPB, and is based in downtown Chattanooga’s Edney Innovation Center. A dual-degree Morehouse and Georgia Tech graduate with an M.B.A. from the Fuqua School of Business at Duke University, he also serves on EPB’s board of directors, and is sort of a human version of The Gig, offering connections to entrepreneurs to get them up and running efficiently.
Shaw says EPB has always been willing to accommodate CO.LAB’s needs, from requests for financial commitments for startups to mentorship from EPB executives. Along with the public utility, he’s also able to draw support from UTC, Erlanger Health System, and The Enterprise Center, a nonprofit also based downtown in The Edney, whose mission is to “improve people’s lives by leveraging the city’s digital technology to create, demonstrate, test and apply solutions for the 21st century.”
“The fact that all of those institutions have economic good as part of their mission makes it really easy for us to work together,” Shaw says.
Shaw says Chattanooga’s assets are also a big draw for collaboration and attracting new innovation. He names the fiber optic internet, proximity to a national laboratory, knowledge and intellectual capital around freight and logistics, three large public hospitals, and the city’s consumerism evolution. Coca-Cola, Little Debbie, MoonPie, Gold Bond medical powder, over-the-counter allergy medicine Allegra, and other frequently used products have origins in Chattanooga.
“When you think about the amount of output on a per capita basis, freight, healthcare, IoT, energy and consumer packaged goods are places where we can draw a line in the sand,” Shaw says. “We can be helpful attracting talent that wants to be in that space.”
CO.LAB helps ensure that the talent pool is diverse and inclusive. As of 2019, the accelerator had 125 public events, graduated 14 cohorts, and trained more than 520 entrepreneurs. Forty-six percent of participants were minorities, 56 percent were women, and six percent were military veterans. The outcome: more than $57 million in raised capital and 250 jobs created.
Branch-ing Out of Incubation
Another Chattanooga startup that’s building a big buzz, among other things, is Branch Technology, which offers 3-D printed construction in a patented process called Cellular Fabrication. Unlike normal 3-D printing, which requires heating, cooling and layering of the material, Branch can turn a mix of plastic, carbon fiber and other materials into large-scale, code-compliant custom structures in open air.
Branch, according to CEO R. Platt Boyd, is currently bidding to redesign wall façades in some of the most visible buildings in major U.S. cities, including airports. He says the technology is appealing because it offers “nearly limitless design,” and also drastically reduces waste.
Branch very recently moved into a new 40,000-square-foot facility, which is a big change from their previous address: the INCubator. Started 32 years ago by the Chattanooga Area Chamber of Commerce, the building’s 127,000 square feet are shared by dozens of startups, and Branch’s successful exit is just the latest success story for the INCubator, as they continue to support new ventures with three-year residencies that help them establish themselves.
The INCubator hosts entrepreneurs in a range of fields, from light manufacturing operations to architecture, medical devices, and even food and beverage products.
On one end of the spectrum, there’s One Off Robotics, a two-man company that designs and creates custom robotic systems for milling, 3D printing, scanning or “something yet to be dreamed up.”
On the other end, there’s Hoff Sauce, which is produced and bottled inside the INCubator, and created by Aaron Hoffman, who quit his job as a product manager for enterprise IoT developer Very in February to become a full-time hot sauce entrepreneur.
What began as Hoffman’s “side hustle” became a very real business that is now in hundreds of stores and has experienced 300 percent year-over-year growth since its 2013 launch. They’ve earned plenty of publicity after taking home consecutive first place awards between 2016 and 2018 at the annual NYC Hot Sauce Expo, which is a very prestigious event among lovers of spicy liquid food toppings.
It also doesn’t hurt that model Chrissy Teigen shouted them out on Instagram.
Alexis Willis, director of small business and entrepreneurship at INCubator, says the fact that it’s “all over the spectrum” helps breed greater innovation and promotes growth for the city’s economic goals. So far, it has graduated almost 560 companies since its inception in 1988.
“The word’s getting out that there’s cool stuff happening here,” Willis says.
That doesn’t include all the amazing restaurants and bars in town. As techies tend to like stuff like craft beer and ramen, you can see the changing lifestyle culture in Chattanooga. Today, there are breweries all over, including standouts like OddStory and Hutton & Smith, both within a few steps of each other on ML King, where 15 years ago you couldn’t have imagined getting an IPA brewed in-house.
Several restaurants, like Two Ten Jack, an izakaya with small plates and big bowls of slurpable noodles, are located in the basement of Warehouse Row, the same complex that houses Bellhops.
Pair the cultural assets, entrepreneurial opportunities, cost of living, tech capabilities and, lest we forget, the natural beauty of a city divided by a stunning river in a mountain basin, and it all adds up for what seems to be the story of a Southern city legitimately rising in tech and startup potential.
And with so much room for growth, plus Gig-speed infrastructure that’s getting smarter all the time, it seems like more enterprising people might be getting up to speed on Chattanooga very quickly.