A lot has been said about the “brain drain” from Louisville. Smart people leave us for bigger cities or those with more vibrant economic cultures. Zack Pennington, an entrepreneur in Louisville, is now one of those people.
But he doesn’t see it as a negative for those of us left behind. He wants to help build bridges between here and his new home, Austin, Texas.
“People are like, ‘I can’t believe you’re moving to Austin, that sucks!’ I’m like, ‘Well it sucks for me and you seeing each other on a day-to-day basis, but it doesn’t suck. That’s awesome. You have a secret agent,’” he tells Insider.
Pennington, who attended University of Louisville for undergrad and graduate school in the UofL Entrepreneurship MBA program, recently moved to Austin with his fiancée, Jacy Cruz. They both are still working remotely at their jobs — his at Edj Analytics, and hers at Switcher Studio.
Pennington also is working to open a new company later this summer, NoraeBar, a karaoke bar in NuLu where you can rent your own rooms.
They relocated to Austin because Cruz is from Texas, and her family lives nearby. She also lived there during college and really liked it.
“People from Texas are very loyal to Texas,” Pennington says.
We caught up with him recently, just days after the move. He’s already immersing himself into the Austin startup ecosystem, attending events and meeting new people.
Austin has 2.2 million people in the metro area, compared with Louisville’s metro population, which includes Southern Indiana, of 1.3 million. Even so, Austin is rapidly growing, according to census estimates, experiencing 26.3 percent growth in the last 10 years, compared to 5 percent for Louisville.
But there are a lot of similarities between the two, Pennington says. Both are progressive “islands” in conservative states and have similar cultures of food, entertainment and music.
But Austin has a lot more startup money flowing into it than Louisville, and Pennington doesn’t believe it’s only a matter of size. He recently went to a pitch event in Austin and noticed some differences.
“One thing I noticed — and this is extremely anecdotal because I’ve only been to one event so far — I felt like the enthusiasm with which entrepreneurs were asking for funding at this event, it didn’t seem like an exercise in futility,” he explains. “I say that because having gone through the pitch competition circuit in grad school and having to raise money afterwards, when you say, ‘I need this much money,’ there’s a part of you that believes that it could happen, but there’s a part of you that feels like it’s falling on deaf ears sometimes. (In Austin), they’re like, ‘Get out your checkbooks because here it comes,’ and people in the audience didn’t seem to laugh it off.”
The entrepreneurs are more emboldened to ask for money because they know there’s more investment there.
“I’ve been following the ecosystem down here from afar through email lists and updates and whatnot, and there’s quite a bit more activity,” he says. “I get daily updates on stuff happening, where in Louisville you would seem to get that monthly. Austin gets consistent nine-figure, early-stage investment months, whereas Louisville has eight-figure years.”
Pennington believes there are several reasons early-stage investing isn’t as high here as it is there.
One is that the tech startup culture is strong, with those who made their money from Dell, often called “Dellionaires.” Louisville’s millionaires mostly have made their money by more traditional, conservative ways, such as real estate or liquor. Those people are naturally going to be more averse to risk.
“When you have an ecosystem like Austin or Silicon Valley, you have a bunch of 30-year-old self-made millionaires running around, money gets deployed a lot differently because those people get it,” he says. “They’ve done it themselves. They know what it’s like to raise money and build a company and sell it, so they know it’s possible.”
Having models for success also breeds more optimism.
“I can count on probably two hands the people I know personally who have successfully raised more than half-a-million dollars in Louisville. There’s not a ton of examples of that in the last five years, let’s say,” says Pennington.
“Whereas, if you’re getting emails every day saying, ‘Blah, blah, blah, raised $2 million, xyz raised $5 million, this company raised $30 million.’ Whether or not you raised any money, I think your perception is that it’s possible,” he continues. “I think that’s almost as important as having the actual funding. You can say, ‘Well, that female entrepreneur raised $10 million, so why can’t I?’ And if you don’t have a lot of examples of that in your backyard, you kind of think it’s not possible for you.”
Pennington hopes his Austin move can help build a bridge between the two cities.
“What I’d love to do is leverage my relationships and understanding of the Louisville ecosystem down here to possibly bring capital connections, talent, whatever back to Louisville,” he says. “Even though Austin is bigger and further along in the startup ecosystem life cycle, I think we have a lot to gain from them, but I think they still have a lot to gain from us. We’ve got a really deep extra piece in beverage, health care and logistics in Louisville. We have potential customers for Austin startups and potential money for Louisville startups in Austin.”
Having more tech companies exit also would help boost the startup ecosystem.
“If El Toro sells for $100 million in the next five years, then a lot of people who worked there — and most of them are under 50 — we’d have 50 people under 50 with $2 to $3 million in their pocket to invest.”
Pennington jokes that he’s trying to coin the term “bi-rivieral.” Instead of being bi-coastal — between New York and Los Angeles — he is traveling between the Ohio River and the Colorado River. He plans to travel between the two cities, proving the positive side of the “brain drain.”
“It’s like no, dude, you just had someone who gives a s#%t about Louisville go. That’s not a loss, it’s a gain because you’re gaining an opportunity, you’re gaining a connection, gaining resources,” he says.
“Celebrate the people who have left and their success, because they’ll always remember where they’re from. Let’s give ’em a reason to come back. ‘You just sold your company, come back and run a venture fund. Come build the ecosystem.’”
This story has been updated to correct population and population growth estimates.