Q+A With Alex Lavidge, a Quintessential Startup Southerner
Alex Lavidge is a former startup accelerator director, entrepreneur, investor, mentor, management consultant, sales and marketing professional, and tech startup employee. His involvement spans more than 207 startups throughout his professional career. As a social entrepreneur, he participated in more than 404 different community-building events and initiatives for the startup community throughout the Southeast, but primarily in Knoxville and Chattanooga. He returned home to the Southeast from Silicon Valley in 2008.
While an Entrepreneur-In-Residence (EIR) at The Company Lab in Chattanooga, he also directed GIGTANK in 2015, an accelerator program that attracted over a dozen startups from across the U.S. and the UK whom later went on to raise over $5.6M in investment capital. He’s currently collecting stories from failed startups called Startup F.A.R.T.S., an acronym for “fire, aim, ready, trash, start over.” Combining both humor and wisdom, his thesis is that the majority of startups fail because they don’t know what they’re more product-focused than market-focused and therefore proceed to launch new ideas with misaligned tasks and goals in an illogical order.
All of this to say, he’s a quintessential Startup Southerner. We sat down with Lavidge, the newest Startup Southerner contributor, to learn more about him, why he’s so passionate about supporting entrepreneurs in our region and what he knows about starting companies that he could share with our readers.
SS: Your grandfather’s entrepreneurial story had an impact on you. Tell us about how he influenced you to get active in supporting and campaigning for entrepreneurship?
Alex: In the late 1940s with a few hundred dollars to start an advertising agency in Knoxville, Tennessee, with his partners called Lavidge, Davis & Newman. After studying best practices of other advertising agencies, and with only a typewriter and a desk in his office, he would venture to knock on doors of locally-owned companies and ask “what’s your biggest problem?” Proposals got delivered the following day. With that discipline, he later went on to launch on his own agency called Lavidge & Associates, which at its peak had 37 affiliate offices in its network spanning 11 countries.
Throughout his entire life, his path in particular was to live beneath his financial means and invest savings back into his agency, stocks and new businesses throughout the region. He seldom saw a reason to go into debt unless it was financing revenue growth as a calculated risk. It was a formulaic roadmap for life design not too dissimilar from other self-made millionaires studied by scholars like late Dr. Thomas Stanley, author of The Millionaire Next Door.
His sensibility and entrepreneurial spirit inspired me to deepen my understanding of business, investing, and the scientific method throughout my sales and marketing career with technology startups — but also drove me toward studying economic development from an interdisciplinary, entrepreneurial perspective. For the most part, this was because he would tell me often, “The challenges you’re going to confront when launching companies in your lifetime are going to be somewhat different from what I had to go through.” He’d then grin and continue, “the only thing that isn’t going to change is that to be successful you’re going to have to make sure you know how to sell and earn more revenue than you spend.”
SS: Is it really that easy? From what we understand, it’s not.
Alex: It’s not easy, but these stories offer so many valuable lessons to learn from them that get overlooked in today’s fast-paced business climate. One of those lessons, for example, is the importance of maintaining a positive mental attitude regardless of adversity.
But even with the right attitude, it is also important to point out that a lot of entrepreneurs struggle if they don’t have mentors with whom they feel connected and trust. In other words, a role model that is relatable and be able to say “I used to be like you.” Then, they are able to offer proof that success is possible for the mentee no matter what the odds. A lot of research and opinions are now published about the importance of relatable mentorship over the past few years.
Besides mentoring, to get started along an entrepreneurial path, it takes money you’re willing to lose. Otherwise, unless you receive an inheritance, or are born into a family with an appetite for investing in new ventures, or you have close friends willing to invest in your vision, becoming an entrepreneur can seem overwhelming when self-financing through savings, debt, or credit cards — even reckless. Studies conducted estimate anywhere from a half to over 75% of adult Americans are working paycheck to paycheck. When you’re in that kind of way of life, it can be very difficult to escape that routine and launch a company unless there’s personal seed capital. We don’t address this point enough in Tennessee, or even the southeast.
So one solid approach a lot of self-made millionaires studied throughout my lifetime started their entrepreneurial journey by learning the craft of brokering and salesmanship before launching a company. From there, they created side income with very little investment capital until enough cash got saved personally to test a new idea of theirs. Or, better yet, they would do this on the side while working a full-time job in the industry where they want to launch a company and learn from others before launching out on their own. As such, the psychology of salesmanship is something I continue to advocate we teach as early as high school.
SS: Talk a little bit about your interest in economic development of startup communities?
Alex: Back in the late-2000s, there was more of an entrepreneurial “egosystem” in the Southeast where decisions, based off of assumptions and opinions, were made in closed boardrooms (and in some cases by those without a business background) — as opposed to an entrepreneurial “ecosystem” where, through a scientific process and stakeholder meditation, new metrics and milestones are identified that drive success where the greater majority benefits. As such, early on, most established entrepreneurs I came to know would just shrug their shoulders with cynicism and disregard getting involved with any new public or private initiatives. They felt like there was nothing in it for them.
These days, the shift toward the “ecosystem” model is happening in the Southeast and it couldn’t come at a better time. The wave of new companies underway faces a new set of challenges in a hypercompetitive global economy that are different, and sometimes not as well understood or discussed, as their predecessors in the last century. This means you need as much diversity of thought and perspective as possible represented in those conversations. Everyone who wants a seat at the table should have one.
However, it bears repeating that there’s also a lot more than collaboration that needs to take place, which, according to the latest research, if we’re not careful can unintentionally foster mediocrity.
SS: You’ve said the health of our entrepreneurial tradition is at risk. How, exactly?
Alex: In Tennessee for instance, we rank as being one of the most difficult states to receive a SBA-backed loan. For SBIR grants, we rank 7th out of 11 states in the southeast. Meanwhile on the plus side, we ranked 21st out of all 50 states in 2016 for venture capital investment — which has definitely improved over the past few years.
But across the country, the largest concern we face as an entrepreneurial community I think is just the trends showing a decline in levels of new business formation. Why this is happening is still up for debate — but depending on which demographic segment you’re analyzing, the reasons range from the increase in student debt in this country to corporations in America making it too competitive for certain types of small businesses or startups to compete.
Throughout the past 10 years, I’ve been watching the debate regarding how to best measure the economic impact of small businesses and startups on our economy that rise above just focusing solely on job creation. In the years ahead, I think we’ll start to see both existing and new public-private partnerships bring stakeholders together to start to identify and agree upon new metrics that incentivize supporting community programs and personal development resources that in turn foster new business formation.
SS: Beyond helping to strengthen entrepreneurial communities, you also have your own entrepreneurial background. What was the first company you started?
Alex: At the age of 16, I saved the money I made as a paperboy and started a classified newspaper called Corvallis Classifieds I sold it the following year to a local communications company in Oregon while working part-time as a book shelver at the local public library. From there, I was always experimenting and hustling.
For instance, while still a teenager, I learned about the high failure rate of new restaurants. So I’d go to auctions and purchase kitchen equipment for pennies on the dollar and then resell to entrepreneurs starting new restaurants if I had a purchase commitment ahead of time.
Or, there was the time I was catering for a corporate function before a football game and saw that they had purchased football tickets for hundreds of their employees. Only half of the tickets were picked up. Minutes before the game started, they threw them out — so I asked permission to take them and sold them on the street for around $700 in extra cash that afternoon. At the time, it seemed like all the money in the world.
All those types of experiences and lessons over the years taught me about the positive and resourceful mindset it takes to be a successful entrepreneur, and investor, as I entered into adulthood.
SS: And then you mentioned that your entrepreneurial journey took you from Iowa to Silicon Valley? How did that happen?
Alex: It wasn’t until I turned 25 studying management and entrepreneurship at the University of Iowa that while running a property management company overseeing 44 tenant accounts. After proving through taking the occupancy rate from around 70% to 100% with my marketing efforts that millennial tenants were more interested in paying more in rent for “culture and quality of life” rather than “amenities and standard of living,” I decided to go after a new challenge.
Of course, I had no idea what I was doing, but I tried to launch PayRent as a platform where tenants could pay their rent online and improve their credit score at the same time. I found myself flying out to Silicon Valley often to visit with investors, tech companies like eBay (which had a massive ecosystem of acquisitions at that point, including PayPal), and developer talent. Eventually, in 2005 I decided just to move out there. It became apparent to me how important it was to plant yourself in the right environment in order to reach success.
However, I was still over my head. The culture in Silicon Valley was unlike anything I had ever been prepared for in my entire life. After I shut down PayRent, mentors and friends encouraged me to stop blowing through what resources I had left and “get paid to learn.” It was the best advice I ever received that I tell 20-somethings all the time. It’s hard to hear when we’re young and ambitious, but no one should feel like they’re in a rush to launch a company. It’s better at first to get paid to learn. Figure out what you’re really good at and build on those strengths. Yet, exceptions will always exist. Malcolm Gladwell, in his book Outliers, points out that entrepreneurs like Bill Gates had already invested over 10,000 hours in computer programming before launching Microsoft as a college dropout. I’ve always felt that in entrepreneurial culture, we have to stop promoting these types of outliers as the norm.
SS: What a unique perspective, having lived and worked around Silicon Valley and then returning to Knoxville and Chattanooga. What did you bring back with you, in terms of knowledge or wisdom?
Alex: The entire San Francisco Bay Area felt like one massive campus. At almost anytime in the day, there was always a chance to learn, connect with others making a difference, and listen to speakers come to present on the latest trends in technology, politics, environmentalism, and more.
So when I returned to Knoxville, I dreamt everyday of a community calendar filled with similar events focused on learning, not just networking. After starting a coworking group that met every Wednesday at the Panera Bread in Bearden for professionals like myself whom could earn a living “with only a cell phone and a laptop,” we then started over Knoxville Overground, the first entrepreneurial community center and coworking workspace in the city that as a volunteer-powered organization was involved with more than 144 different events and initiatives during its first year to bring help ignite the entrepreneurial spirit in my hometown.
Knoxville Overground, like Create Here in Chattanooga, after being recognized in Fast Company magazine 4 years later as a top example of social innovation in Tennessee trailblazed and influenced an imprint on the Knoxville community (as well as the region like Nashville, etc.) that continues to this day through numerous other initiatives still going like the Knoxville Entrepreneur Center where I continue as an advisor to this day.
SS: To date you’ve been exposed to more than 207 different entrepreneurs and startups throughout your career. What usually has been the biggest challenge standing in their way?
Alex: Albert Einstein is given credit for saying, “if you judge a fish by its ability to climb a tree, it will live its whole life believing that it is stupid.” I too think everyone is born a genius, but where an entrepreneur and their team sets down roots and decides to grow is a significant, oftentimes unrecognized factor, in either their success or failure.
Point being, unless the startup they are starting is in the same industry as some of the surrounding employers (or high-quality mentors) whom have credibility backed by a strong track record, superior market intelligence, and industry-wide strategic relationships, then it might make it that much harder to break into the market.
Entrepreneurs also need to be able to connect with the culture with their authentic sense of self. We are all more likely to help those most like ourselves.
SS: In general, do you think the culture for entrepreneurs in the South is doing them good? What’s wrong with it, and, speaking generally, how could it be better?
Alex: There’s so much to love about southern culture. We’re friendly — and loyal — to a fault. We’re also very frugal and can be adverse to risk. Yet, there’s also a “pay it forward” culture here that is rare in other parts of the country that is going to be a leading contributor to our entrepreneurial success in the years ahead.
We have our challenges ahead though. Since moving back, I’ve been passionate about promoting STEM (and STEAM) education. It’s projected that by next year, over 2.4 million jobs will go unfilled because companies can’t find the right qualified candidates. So over the years I’ve been involved with a variety of different initiatives to help improve collaboration and consensus building among the public and private sectors. Most recently, a firm I founded called Syner-G (while an EIR at Strata-G) was hired by the Chattanooga Chamber to identify how technology platforms like Workbay.net can be used to help improve communication amongst stakeholders. It helps when parents, students, counselors, teachers, and employers are all on the same page — and online platforms like Workbay we felt after our independent assessment can add tremendous value toward lowering the skills-work gap in not only Hamilton County, but across the Southeast as well.
SS: What are some of the projects you’re working on now?
Alex: I’m thinking a lot about how we can comprehensively increase deal flow for investors in the South.
At the moment I’m independently management consulting and conducting a market research through an agency I’m in the process of rebranding called The Startup Experts. Clients at the moment are mostly focused in the financial services industry like Lirio LLC, a parent company for marketing platforms like Finworx and Fiveworx that are coming up with new ways that artificial intelligence and machine learning can improve outcomes for inbound marketing. They spun out of BPV, which previously had $2 billion under management in Knoxville.
Other clients like Smart RIA, also based in Knoxville, provide online compliance software for registered investment advisors. Carlson Prospect Research based in Austin is another client that ties in here where they compile wealthy prospects for nonprofits that can be approached regarding their interest in contributing to a nonprofit cause.
Lately my interest has been in how prospecting technology and marketing automation can help regional funds attract more capital that can then be reinvested in emerging companies throughout the southeast. At the moment, most of my collaboration on that front is with Angel Capital Group. At the same time, I’m also having a lot of conversations with corporations about how they’re going about funding innovation both inside and outside of their office. Especially with online equity crowdfunding (or I perfer the term “marketplace investing”) the way companies are getting financed for growth in the future is changing.
But in the short-term, I am very much looking forward to being a weekly contributor for Startup Southerner.
Originally published at startupsoutherner.com on June 22, 2017.