The ReSET - How Nashville Skunked the Rest of Us

12/3/18

Newt Fowler

If you haven’t heard, Nashville landed quite the consolation prize from Amazon’s search for a new headquarters location. When you look past the “smaller operations center” spin, what Amazon will locate in Nashville is hardly a consolation. Nashville came out the winner even over D.C.’s and New York’s Solomon like victories. What Nashville won plays to its strengths and, equally importantly, shapes its future. The incentives required by Nashville pale in comparison to the checks the winners will write. The Amazon package arriving in Nashville will allow the city to manage its growth with minimal impact on other employers, neighborhoods, and Nashville’s increasingly eclectic vibe. And the workforce that Amazon will build only enhances that of two vibrant industry clusters that Nashville has been working hard to grow. Simply put, Nashville skunked the rest of us.

So what happened? Nashville over many years has worked hard to foster large anchor companies and promising tech startups in two key industries. As a result, Nashville has both a burgeoning supply chain management cluster and dominant health care cluster. For years, Nashville focused on growing these unique industry clusters, while never losing sight of what makes Nashville attractive in music, arts and neighborhoods.

When one hears “ops center”, back office or customer support, emanating from fluorescent lit, soulless cubicle farms come to mind, hardly embodying the high paying jobs one assumes arrives with the new headquarters. The first clue that something different is going on in Nashville is the news that Amazon’s center will employ 5,000 workers with an average annual wage of $150,000. This doesn’t sound like the ops center of one’s imagination, serviced by the pay scale of someone trained to put us on hold.

When Amazon recently bought PillPak for nearly $1B, it left little doubt that they were moving into the healthcare space in a manner harmonious with their logistics strength – moving healthcare to the web. There’s hardly a week that goes by without some suggestion of other moves by Amazon in healthcare. It makes complete sense they would look at Nashville, with its vibrant health care and logistics clusters. One quickly appreciates what Nashville has to offer Amazon – talent not only in the healthcare sector but also in logistics, a talent pool coming from a cross section of industries and skills. Nashville and Amazon share a healthcare DNA with a logistics laden helix. You get the point.

Second tier cities that play to their strengths, first by cultivating the industry clusters that differentiate them, then by focusing on growth opportunities that expand not only what’s happening there today but positions those clusters for what will happen tomorrow, will experience similar wins like Nashville. Businesses go where the talent they seek already thrives. Creating clusters with such talent requires a hard, unwavering, coordinated effort over the long term. There are few ribbon cuttings and other moments that politicians live for. When a region truly understands and commits to its strengths and then focuses on where such strengths can take them in the future, companies like Amazon will take note. Such regions may well have their Nashville moments. In the end, the incentives to lure Amazon to Nashville didn’t really matter; what had been going on in Nashville did.

With more than 30 years’ experience in law and business, Newt Fowler, a partner in Womble Bond Dickinson’s business practice, advises many investors, entrepreneurs and technology companies, guiding them through all aspects of business planning, financing transactions, technology commercialization and M&A. He’s the pastboard chair of TEDCO and serves on the Board of the Economic Alliance of Greater Baltimore. Newt can be reached at newt.fowler@wbd-us.com.

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