October 20, 2011
Craig Settles, Industry Analyst
Connecting Communities: Chattanooga's Gig Network Creates Economic Development Pressure Cooker for Success
When was it started?
How many miles, what technologies, what speeds?
Over 600 square miles
Who owns the network?
Chattanooga's public utility, EPB, owns and operates the network
Who (what organization) was the primary driver of the project?
EPB and the City administration push the project through
Summarize the economic benefits of the network has brought
- Improved operation of EPB's smart grid, which in turn saves local businesses millions of dollars a year
- Was a major factor in convincing several large firms to move to the area
Imagine if your could turn out a dozen start-ups every couple of months, complete with a core group of management and employees, financial suitors knocking on the door and a solid outline of a business plan. What if it only takes one weekend – 48 hours – to do much of the heavy lifting for this?
While this may seem like California dreaming, Chattanooga, TN is perfecting such an economic development engine that's starting to fire on all cylinders. Appropriately titled 48Hour Launch and initiated by local business incubator Co.Lab, this is a pressure-cooker weekend in which over a dozen would-be Steve Jobses compete to see who can create the most viable business. Chattanooga's gigabit network is key to the event's success.
Co.Lab provides start-ups with resources that range from advice and workspace to valuable business connections. In 2010, the small group picked up on this weekend launch. The first event provided some value, but it was the second one in April 2011 that smoothed out the wrinkles.
"We set up an online Web application so people can submit ideas," says Co.Lab president Sheldon Grizzle. "We gather and evaluate a lot of ideas representing many industries. It's not just technology products and services we want to see at the next 48Hour Launch."
Winding up for the pitch
Grizzle's team actively courts entrepreneurs with new ideas for consumer or packaged food products. "We believe this is a unique, complementary component to the tech-only approach of similar events," continues Grizzle. "We want to see more startups that bridge the online and physical worlds."
Co.Lab selected what they felt were the 20 best ideas from among those submitted, and brought them together for Pitch Night a week ahead of 48Hour Launch weekend. This Top 20 selection was based on which entrepreneurs the company felt had ideas that could be solidified and made ready after two days to lure potential angel investors.
Sheldon was part of the Pitch Night selection team, along with two local venture capitalists who had also been entrepreneurs, a tech entrepreneur. However, he doesn't think this is best collection of judges for this phase. Next tiime, Co.Lab plans to have more techs, developers and engineers participating.
Each entrepreneur gets three minutes on stage to pitch the crowd and be filmed for a video that will be on Co.Lab's blog. This is a completely democratic process. The developers, writers, business strategists and others in the vote on who they feel have the best idea and presentation of that idea.
One of the big draws of 48Hour Launch is that participants also get to build their management team and staff during this same event while they enhance, finish and refine their products. The video allows those who missed Pitch Night but can bring necessary skills needed by the eventual winners, to start due diligence, research the market, assess the business model, etc. This involvement can come from Chattanooga or anywhere on the planet with Web access. At the end of Pitch Night, 13 entrepreneurs were selected to participate in 48Hour Launch.
It's show time
Co.Lab located an abandoned building in Chattanooga with enough space to hold the various people, computing equipment, meeting areas and office equipment needed to support a 48-hour marathon of technology and business development. Had 300 people coming through, 200 of them for Sunday's demo night. There were 80 – 100 people engaged at any one time.
Two weeks before the launch event, they started working on two fiber drops from EPB's network to inside the building and added three WiFi routers. Skype enabled several experts from around the country to deliver 30-minute presentations for participants on business tactics such as how to effectively raise angel capital. They also used iChat, Skype and collaboration software so the teams could work with off-site developers and others who participated remotely as team members. On Sunday night, all of the teams' final demos were live-streamed on the Web.
48-hour Launch kicked off Friday evening before an audience of mostly VCs, investors and other financial experts, freelancers, technology and business professionals such as software developers and marketing. The teams recruit from this audience talent they need for their fledgling companies, and audience members decide who they want to join, at least for the weekend. Four companies dropped out after they couldn't get enough people to make their respective projects viable.
Teams bring their own physical hardware including servers and laptops to plug into the gig network, and half the teams used servers on the cloud. They also bring developer tools and software to facilitate business plan development and financial modeling.
It costs Co.Lab $5000 to run 48Hour Launch, which includes giving participants meals, mugs and other goodies. Sheldon estimates the total cost probably is $12,000 after factoring in staff time. Last year they also gave away a $5,000 prize to the winning team. A community just starting to do launch events should find an organization to drive the process, particularly raising sponsorship dollars. A nonprofit with connections to get the right people involved makes everything easier.
For Co.Lab's next event there are three categories of teams, and the winner in each one receives a $10,000 package that includes accounting, legal, Web hosting, marketing, and other services donated by local professionals. Additionally, a local foundation will add a $2500 cash prize for the winning tech product.
Participating in 48Hour Launch gets results for most of the participating teams. Two companies combined raised $400,000 in investment capital within 60 days after April's event. Two of the seven remaining entrepreneurs are working on their projects fulltime, while the rest are working part time and boot strapping operations.
The strength of the 48Hour Launch program is that it uses broadband to create "mobile" powerful computing centers from which organizations such as Co.Lab can harness multiple communication technologies and remote resources to build companies within days. If they combine factors such as a strong local university environment and/or research facilities, communities can create relatively inexpensive job generators.
Craig Settles is a broadband industry strategist, marketing expert, author and speaker. He helps municipalities and organizations use broadband technologies to improve operating efficiencies and boost local economic development. In addition, he is frequently called upon as source of broadband expertise by leading media outlets.