Entrepreneurship: What it takes to be successful, and should government have a role?

October 18, 2023

SEASON 3, EPISODE 4: Two founders join Governors Bredesen and Haslam live at Launch Tennessee’s 3686 Festival to share their insights and experiences as entrepreneurs

In this special episode of You Might Be Right, Brad Smith, founder and CEO of Russell Street Ventures, and Sarah Bellos, founder and CEO of Stony Creek Colors, join Governors Bredesen and Haslam to discuss the highs and lows of starting a business, what they believe are the most important elements to ensure startup success, and if there’s a role for government to play in supporting entrepreneurs and startups. This episode was recorded live at the Wildhorse Saloon in September 2023 as part of Launch Tennessee’s 3686 Festival.

Subscribe and follow You Might be Right wherever you get your audio content – including Apple Podcasts and  Spotify– to never miss an episode, or sign up for our email list to receive new episodes straight to your inbox each week here.

“Government as a regulator, government as convener, makes a lot of sense”

The conversation kicked off with a discussion of what role the government should play in helping entrepreneurial companies.

“I think it’s a limited role,” said Governor Bredesen, who has started eight companies during his career. “I tend to think of successful entrepreneurs and startups more as wildflowers than garden plants and they sort of startup in places you wouldn’t expect and for reasons you wouldn’t expect, but to the extent to which government can help and particularly filling in some of the empty spaces, I think it is worth trying.”

Smith shared several observations from his previous work helping set up Launch Tennessee, the organizer and host of the 3686 Festival, years ago while he was working for the State of Tennessee. He noted that while the organization plays an important energizing and convening role, his experience at the time with government attempting to make loans to early-stage companies was more challenging.

“It was really hard to set it up in a way where it attracted the best entrepreneurs. Generally, what was happening was the best entrepreneurs were going to the private markets, and only the ones who couldn’t get funded in the private markets were coming to the government. I’m not saying that always happens, but at least that was kind of our experience with that,” he said. “So, I think government as a regulator, government as a convener makes a lot of sense. Government as essentially giving out subsidies in different ways, I think is a lot more complicated.”

Bellos noted that Stony Creek Colors had received several federal competitive research grants, which have in turn served as critical validation points.  “For us, as a company that has invested a lot in intellectual property and a proprietary system…those are things that we’ve been able to fund in part through federal competitive research grants,” she said. “[The grants] helped us then leverage venture capital because we were able to support sometimes basic science or these applications that were novel in a way that certainly would not have been possible if I were just an individual farmer saying, I want to capitalize on this new market opportunity.”

“You need hindsight to appreciate the decision”

The conversation shifted to Bellos, Bredesen, and Smith sharing advice and insights from their experiences as entrepreneurs, from building the right team to overcoming challenges.

Smith shared his advice for guiding a team through a challenging period, noting that he has learned through time and experience that “there’s a lot of natural ups and downs” to starting a company, and that setting that expectation for the team up front can go a long way.

“Having that foresight to kind of let people know that’s what they’re going to experience over like a couple year period is really, really important,” he said. “And I think the more you can set people’s expectations for that, the more comfortable they are when they’re in that moment versus feeling like it’s an existential crisis every time it happens because actually a common pattern.”

Bredesen shared lessons he’s learned about building the right team, from looking to internal candidates for open positions (“If you have somebody already in the organization who you think is 80% of what you need in that job, that’s usually a better choice and a less risky choice than trying to go out”) to being too slow to move on from people who are not working, while acknowledging that it is often easier said than done. “It’s very difficult to move somebody on,” he said. “And I think everyone I’ve ever known to start a company has somehow gotten burned by being too slow to make those kind of moves.”

Bellos discussed making the difficult decision of “pulling the plug on something that seems not dead yet” in service of a longer-term vision and strategy for the company. “Abandoning our initial model in pursuit of this longer-term model was really hard and challenging,” she said. “When I look at the 10-year vision for the company, we have to be investing in the new technology, and sometimes that requires going all in on it. And so, it’s something that has taken me a longer time. You need hindsight to appreciate the decision, but now it seems like the obvious thing.”