Columbus isn't the next Silicon Valley and that's just fine, experts say
By Tim Feran
The Columbus Dispatch
Almost every city in the country sees itself as an emerging tech hub of national stature. But in the next 20 years or so, it's likely that only a small percentage will fulfill such promise.
What about Columbus?
The area has seen some successes in recent years, but it doesn't always fare well in national rankings. Though one survey ranks Columbus at the top of emerging tech cities, another will place the city much farther down the list.
A few decades, though, is an eternity in the world of technology.
After all, it's been only one decade since the iPhone was introduced, changing the communication landscape forever.
Even further back, Columbus was the center of the tech world when CompuServe was founded in 1969. Today, there is little left of that pioneering company.
So, in 20 years' time, given enough money and effort, could Columbus be a major tech-industry player?
"Every city tells the same story — about how they are fostering startups and seeing increased venture-capital activity," said Aaron Renn, senior fellow at the Manhattan Institute, an urban-affairs think tank based in New York. "Columbus doesn't super stand out versus other Midwest cities. It is building its industry, doing the right things. But the idea that it is the next Silicon Valley is simply not true."
Though people such as Steve Case, the billionaire co-founder and former CEO of AOL, have been promoting the growth of tech startups in emerging markets across the nation through the "Rise of the Rest" program, "the technology industry is disproportionately in a handful of cities — the San Francisco Bay area, New York, Boston and, especially in terms of venture capital for technology, Los Angeles," Renn said.
Even the co-founder of CompuServe, Jeff Wilkins, a longtime leader in the local tech industry, acknowledges that for all of central Ohio's attributes, "Columbus is never going to be Silicon Valley."
But both men, and many others, hasten to add a significant point: Columbus doesn't have to be the next Silicon Valley to be a successful tech city in the future.
"This is not a zero sum game," Renn said. "You have to have the courage to go with who you are, rather than to say you need to be more like Silicon Valley."
Part of the issue might simply be that when people talk about tech cities, they are talking about technology in a particular way.
"My kid is in kindergarten, and his school eliminated technology classes," said Matt Scantland, co-founder of CoverMyMeds. The young Columbus health-care technology company was purchased for $1.1 billion earlier this year in a deal that has been seen as the kind of pivotal event that can take local startup efforts to a higher level.
"Some parents said, 'Why?'" Scantland said. "The school said, 'Because technology isn't a special thing we talk about after all the other subjects. It's the platform that all of these educational opportunities are built on.'"
Similarly, in the past few decades, when people talked about Silicon Valley, Renn said, "we tended to think of big consumer businesses like Google and Apple." Technology of that kind won't be a dominant industry in Columbus.
But that's fine, because in the future, "technology becomes the key enabler rather than the special thing after the real business is done," Scantland said. "Rather than being a consumer internet center, which is what Silicon Valley is, there are a lot of things we do and can do better than Silicon Valley.
"The opportunity for Columbus is to grow our economy on the forefront of rewiring and reimagining these big industries we're already good at, with the fabric of technology. The first companies that do it successfully will be the ones that grow the fastest."
The intersection of technology with other businesses will occur and is already occurring in such areas as health care, retail, logistics, insurance and finance, said Ben Blanquera of the Columbus Collaboratory, a cybersecurity incubator founded by seven local companies.
"And analytics," Blanquera said. "Analytics in this town is going to be phenomenal. Between the investment at Ohio State, Denison (University) and other places, we'll have a deep, deep expertise in analytics."
Something else is not as apparent: cybersecurity.
"With financial tech, you've got to have it," Blanquera said, "and at businesses like AEP, where it's critical to infrastructure. We're safe, stable, secure — and that's why Amazon and Facebook are coming here."
Ohio's farm economy also could have a role.
"I think agritech is a great one, too," Renn said. "Ohio State is a great ag school. But this is one where you have to have some courage. People in Columbus talk about the city being a cowtown. But no one outside Columbus ever talks about it as a cowtown. Columbus could have owned farm-to-table restaurants. But they couldn't do it psychologically."
Luckily, the weaving together of technology with other sectors is something in which Columbus has a long history, said Richard Ridgway, chief scientist-defense technologies for Battelle.
Ridgway was a leader in one such joint venture, Photonic Integration Research Inc., or PIRI. The fiber-optics partnership, founded at Battelle in 1987 with Mitsubishi and Nippon Telegraph and Telephone Corp., was ultimately sold in 2000 for $1.8 billion, the largest sale transaction in Battelle's history, to SDL Inc., a Silicon Valley maker of lasers used in fiber-optic networks.
"We're always on the lookout for those kind of things," Ridgway said.
"Innovation comes about often through the intersection of two things — technology and something else," he said. "And this is something Battelle does well — bringing together diverse groups and creating interesting solutions to problems."
The talent base
Thanks to being the home of Ohio State, Battelle and such early tech companies as CompuServe, Columbus is blessed with a considerable amount of tech talent, Blanquera said. "We live in one of the richest, most talented tech ecosystems in the country. We've always had so much talent."
"You used to have to go to Stanford to get great engineers," said Jeff Schumann, CEO and co-founder of Columbus-based cybersecurity startup Wiretap. "But we've got great engineers coming out of Ohio State (and many other schools) ... even DeVry."
Such readily available talent was something that helped give Schumann the courage to stay in Columbus when he was mulling whether to create Wiretap or accept a tempting offer from Facebook.
"Mark Zuckerberg approached me just as we were about to get off the ground" three years ago, Schumann said. "So it was, 'OK, either I do this or lead Facebook Workplace.' I had heard over and over, 'You need to go to D.C., or the Valley, or New York.'"
"I said, 'Run, not walk, to Facebook,'" said Greg Moran, Wiretap chief operating officer.
"But I turned them down," Schumann said. "My heart was here in Columbus. It was an opportunity to do our own vision — and now we're attracting talent from the coasts. Out there, people jump from company to company. But here, it's so collaborative. People want to help each other succeed."
The abundance of tech talent also was one of the things that allowed Scantland to base CoverMyMeds in Ohio rather than moving to California.
"I never even considered it," Scantland said. "It wouldn't have solved any real problems we had. And when I think about what you need to build a successful tech company, it's really location independent. You need to have a great business model, and we were equally able to do that in Columbus. Building a tech company is hard — you win through people — and we're able to get great people here."
Today, CoverMyMeds has 700 employees "who have dedicated themselves to building a really special company," said Scantland, who recently announced plans to hire hundreds more. "That's something easier to do in Columbus than in Silicon Valley, where turnover is measured in months, not decades."
The amount of available talent isn't the only reason Columbus' future in technology seems bright.
The area's investment and entrepreneurial "ecosystem" is far different and more developed than even as recently as five years ago, said Tom Walker, CEO of Rev1 Ventures, which helps develop fledgling companies.
Spinoff companies from Ohio State research, for example, have jumped significantly.
"Last year, we were fifth in the Big Ten," Walker said. "You'll recall that a few years ago, we were last and had been last for a long time."
Holding up a list crowded with the names of companies, organizations and investment funds that currently make up the Columbus startup ecosystem, Walker smiled.
"We had two investors on this list five years ago," he said. Today, there are more than a dozen, and more are coming. And that doesn't include investments that such local companies as Nationwide, State Auto, Cardinal Health and Wendy's are making in their own internal innovation groups.
"If you add up the numbers, Columbus is collectively far greater than other cities" in investing in technology, Walker said. "There will always be money in ... (Silicon) Valley. But we're in the heart of a stable and growing economy. Twenty years from now, you'll see a sizable dedicated life-science investment fund, maybe an agri-tech fund, too. As Columbus tech companies grow, more investors will come and will be very targeted."
In addition to all of that, Columbus has its own "secret sauce" that will help it in the future: a collaborative environment between the public and private sectors that has been dubbed "the Columbus Way."
"It's one of the great things about Columbus," Blanquera said. "The way people freely share ideas and expertise. It's pretty special."
"That's absolutely true," Walker said. "We couldn't do the things we do if the city wasn't collaborative. Other cities in the U.S. don't have this kind of collaboration. It's not that those cities are all full of enemies — they just don't have the kind of collaboration that we do. I think it's because our big corporate successes are still relatively young, while a lot of other cities have third-generation leaders."
In addition to a collaborative atmosphere, with the sale of CoverMyMeds, "you've proven you can build a $1 billion company," Renn said. "Even if it's not as sexy as Uber or Facebook, you have a lot of companies that can build in scale."
But the promise comes with a warning.
"For Columbus, the biggest worry, the biggest risk is that technology historically is a highly cyclical industry," Renn said. "The dot-com crash was the last big tech recession. At the time, the same thing was happening as today — every city wanted to be the next big thing. Well, in that recession every single startup cluster got wiped out except for the (San Francisco) Bay area, Boston and Seattle. Chicago got wiped out. New York got wiped out.
"So if there's a big technology crash, cities like Columbus and others outside Silicon Valley are vulnerable, because when there's a crash, technology contracts to its home base. The risk in the future will be repeated technology crashes will cause a shakeout and you could be a loser. You have to think about how you'll weather the next technology crash."
Six Columbus-area companies to watch
These Columbus-area companies are considered possible breakout technology companies. Rev1 Ventures, an incubator and investment organization that assists fledgling companies, recently honored this year's fastest-growing Columbus startups, and one or more could be the next company to achieve a $1 billion "exit" or buyout, said Tom Walker, CEO of Rev1.
"Wouldn't it be fantastic if all of them were billion-dollar exits?" Walker said. "They're all great companies and all at different stages of development and they all have a lot of positive momentum going on."
The companies cover a wide range of business sectors, from agribusiness to health care:
3Bar Biologics — This bioscience company delivers microbes to farms to increase yields. "Much like probiotics for humans, we're taking good bacteria and applying that to plants to help the plants take up minerals better," said Jane Fife, chief science officer. "It's more sustainable than conventional fertilizer."
Clarivoy — The analytics company uses a proprietary computer program to determine the effectiveness of TV ads for clients, and identifies which networks, shows and time slots are the best platforms for those ads. "We can tell advertisers when a TV spot airs, what led to website visits, to store visits, to sales," CEO Steve White said.
MentorcliQ — The company's mentoring software is a computerized system to help businesses recruit, enroll, manage and measure participants in mentoring and other employee-development programs. The system allows both employees and administrators to participate in an easy, intuitive and engaging way.
Prevedere — This business has created computer software that helps companies plan and forecast future financial performance by monitoring a wide range of external factors, including everything from weather forecasts to social trends. "We watch and measure in advance and we have a system that updates constantly," said Chris Wheeler, director of partnerships and alliances.
Simple-Fill — The company has developed an efficient and affordable technology that compresses natural gas for use in refueling small commercial fleets. The process has eliminated the complexity and cost of traditional compression methods, enabling more businesses to take advantage of natural gas as a fuel for their vehicles.
Updox — This firm has developed a computer platform that helps independent health-care providers share patient records and care plans, schedule appointments, make payments, and provide care notifications and other services. "Everybody says small practices are going away," CEO Mike Morgan said. "They're not. But they are inundated with paper. We simply help them stay independent by giving them an easy-to-use centralized (online) care hub."
Checking the lists: A trio of tech town rankings
Top 25 tech cities
Earlier this year, Cushman & Wakefield, a global real-estate services firm, put together its Tech Cities 1.0 report to find the top 25 tech cities across the United States. The cities were ranked by analyzing the concentration of factors such as talent, capital and growth opportunity – the key ingredients that experts say make up the "tech stew."
1. San Francisco
2. San Jose, California
3. Washington, D.C.
5. Raleigh / Durham / Chapel Hill, North Carolina
7. Austin, Texas
8. Denver / Boulder, Colorado
9. San Diego
10. Madison, Wisconsin
11. Minneapolis / St. Paul, Minnesota
13. Oakland / East Bay, California
14. Portland, Oregon
15. New York City
18. Los Angeles
20. Orange County, California
21. Dallas / Fort Worth, Texas
22. Kansas City, Missouri
24. Salt Lake City, Utah
25. Nashville, Tennessee
Top cities for tech jobs
Job search site ZipRecruiter recently ranked the 20 fastest-growing tech markets based on year-over-year data that include average salary, rent and home costs.
1. Huntsville, Alabama
2. Thousand Oaks, California
4. Albany, New York
5. Kansas City, Missouri
6. Orlando, Florida
7. Salt Lake City, Utah
8. Nashville, Tennessee
9. Jacksonville, Florida
17. Tampa, Florida
18. Providence, Rhode Island
Best cities to work in tech
For the fourth year in a row, SmartAsset looked at such things as cost-of-living and wage levels, among other factors, to find the best cities to work in tech.
2. Springfield, Illinois
3. Sierra Vista, Arizona
4. Raleigh, North Carolina
6. Huntsville, Alabama
7. Richmond, Virginia
8. Wichita Falls, Texas
9. San Antonio
10. Des Moines, Iowa