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2011: A Tech Odyssey

Is Columbus the next Silicon City?

By David Lewis, Morgan Landis

Published October 27, 2011

Cowtown.

For a city eternally struggling to outrun its nickname, Columbus sure has some fast horses on the track. As excitement builds for the city’s TEDx conference, a local version of the exciting international symposium on technology, entertainment and design, we must realize that we have been far more than a “cowtown” for decades.

Columbus has long been a bastion of cutting-edge research and emergent technology; Forbes Magazine gave us the No. 1 spot in a list of Top Tech Cities in 2008, and again in 2010. In fact, in the national race to become the next great tech hub, Columbus has been in the pole position for a long time, and now is pulling into the lead.

In 2011, three years after the Forbes article put the nation’s optical sensors on Columbus, and after three more withering years of economic stagnation, it’s hard to keep our role in the nation in perspective.

Is the Capital City poised to be the next Silicon City?

The Forbes ranking: No. 1

Based on advancements in ”specific pockets of science” as researched by the story’s main source, Phillip Auerswald, a professor of public policy at George Mason University.

Some of those pockets include:

Advanced Materials (being developed at Battelle Memorial Institute, among other companies)

Battelle: Aliens, lightcycles, the Death Star, the moon, Jurassic Park and Wookiees were all engineered at Battelle Memorial Institute. J/K! – but, for reals, the research-management giant is behind some of the coolest inventions of the 21st century.

Quantum Dots (electronic lights so tiny they are used to tag individual molecules, invented at The Ohio State University)

Micro-Systems (electronics smaller than 1 millimeter; OSU has, again, produced some of the top scientists in this field) and Cell Microbiology.

The Ohio State University: With 56,064 students, OSU is not only one of the largest universities in the country, it is also a leading research institution, with nationally recognized science and technology departments, a supercomputer lab, biomedical research and agricultural departments, driving the Scarlet and Gray to the top of the field in cell microbiology research.

Nanocrystals (BioCrystal, Ltd.)

BioCrystal: According to its website, the company was funded by private investment sources in Columbus in 1996 to develop various kinds of nanotechnology (tiny stuff) for applications in life sciences and medicine.

Polymers and Plastics (Ohio leads the nation in Gross Domestic Product generated by this industry, including companies like Syscom Advanced Materials, which makes conductive polymer yarns, and Zyvex, which develops nano-carbon fiber materials)

Zyvex: From building stronger bridges to race car adhesives, Columbus-headquartered Zyvex is an industry leader in nano-based carbon fiber technologies. They even used their Arovex carbon-fiber material to develop the Piranha, an unmanned nautical drone with a 3,000-mile range – it’s designed to combat pirates.

Syscom Advanced Materials, Inc.: Metal-clad polymer fibers, used extensively in communications and aerospace applications, result in highly flexible, lightweight, corrosion- and cut-resistant electrically conductive wiring that can stand up to the demands of the most strenuous applications.

All of these are fields that technology experts consider the most important frontiers of the future.

William Pentland, the Forbes contributor who wrote the story placing us at No. 1, didn’t just aim a far-off telescope at the capital city; he visited in 2009 following his designation, and says Columbus is absolutely on track.

“I don’t know about the rest of the list, but for Columbus it’s perhaps even more so now,” he said. “Everyone is looking for a replica of Silicon Valley, but that’s not really what’s happening. These innovation clusters are networks of very smart people and money, not really tied to one place.”

Pentland noted that long before Forbes made any acknowledgment at all, Columbus was a worldwide hub of research, thanks to the presence of Battelle Memorial Institute.

“Don’t underestimate Battelle; it’s just a monster,” he said. “They had, what, a $4 billion budget in 2010? And they have their fingers in the jar all over the world.”

“I think it’s quite likely Forbes made [its assessment] based on where we’ve come,” said T.R. Massey, a spokesperson for Battelle. “You base your predictions on track records, I would think. Silicon Valley is a special place, but I certainly believe Columbus has all of the tools to become one of America’s great tech centers. Certainly, Battelle is doing all it can to make that happen,” he added.

Massey also noted that while institutions such as Battelle and The Ohio State University, Edison Welding and TechColumbus have been “major players” doing important work individually, there is now a growing effort to foster cooperation between them.

“We’ve got people who work in front of and behind the scenes to make a concerted effort to grow the city, and I think that concerted effort is growing every day,” he said.

According to Forbes.com’s profile on Columbus, the technology sector employs 9.6 percent of our workforce. Businesses like Battelle do the lion’s share of attracting skilled tech workers, as they create a high demand for information technology professionals, as well as employing the best and brightest researchers in the field.

“One of the great things that Columbus has is the abundance of schools like OSU and Devry and Columbus State,” Massey said. “Here, you have a new group of young, energetic people available every spring. The schools work hand in hand with the businesses; at least, that’s the model,” he said.

With both private industry and public education working in tandem to build a tech infrastructure, Columbus rather quietly became a force in innovative thinking, with tech start-ups realizing the potential for entrepreneurship within the framework of extant corporations – after all, the capital city is home to 15 Fortune 500 companies, each with unique tech needs of their own.

“There’s a great community of technology people in Columbus, born out of some very successful companies. There’s a great educational system that lures young, innovative people to the city,” agreed Chris Winslow, Assistant Vice President of Venture Accelerations at TechColumbus, which provides coaching to local tech start-ups. Winslow says Ohio is ahead of the curve in terms of providing an “incredibly strong support system around early-stage funding for startup companies.”

“There’s a good history of technology companies that have been launched out of Columbus, both big and small, that have created the foundation,” he said.

Booting Up

Columbus’ technology spark can largely be traced to the symbiotic relationship the city has enjoyed with Battelle. Founded in 1929, thanks to Ohio industrialist Gordon Battelle, the entity is a non-profit “charitable trust,” and as such is exempt from taxation. Over the years, they have brought about many of the world’s most commercialized tech innovations, from developing World War II tank armor to the Xerox office copier machine, submarine fuel, the Universal Product Code (“bar codes”), compact discs and melt-proof chocolates.

The majority of the institute’s most important innovations have taken place over the last several decades, and more than a few of them are simply not in the public sphere of knowledge at this point, as the federal government, including the Department of Defense and the Department of Energy, placed Battelle at No. 28 in the annually published list of Top 100 Federal Contracts.

The research dynamo now has three divisions: national security, energy and environmental sciences, and health and life sciences. A nonprofit with a multi-billion dollar budget, they regularly collaborate with local companies and universities to increase knowledge in science and technology.

The Ohio State University has an equally illustrious track record. Initially an agricultural and mechanical school, former U.S. president Rutherford B. Hayes, at the time Ohio’s governor, was a dedicated advocate for the creation of the university. His vision for the school included a more liberal, research-driven curriculum. After reconciling conflicts with the powerful agricultural interests, as well as the demands of Ohio and Miami universities, the school received permanent funding from the state.

For decades, OSU cultivated a strong reputation for research and innovation. Then, in 1998, the SciTech campus, a collaboration between the school, city and state, was created to further aid in the development of commercial technology, according to the university’s website. Already endowed with nearly 400,000 square feet available for tech-based research and development, there are plans to expand the facility in the near future.

The Ohio Supercomputer Center is also located on the SciTech campus. It was established in 1987 and is utilized for a range of computation applications, computer sciences and analyzing energy and environment. In 2003, the Department of Homeland Security based the National Academic Consortium for Homeland Security at OSU. It’s a natural place for it, considering that, according to Washingtontechnology.com, the Department of Defense spent $309 million at Battelle in 2011, right across the street from the university.

Other technology pioneers, including those in the early days of the web era, also originated in Columbus. CompuServe, one of the first online service providers, started here in 1969 and was eventually purchased by AOL. Sterling Commerce, founded here in the 1980s, was an early innovator in electronic commerce; IBM now owns it. Both companies still employ thousands in the area. The city is also a base for medical and transportation companies, like OhioHealth and NetJets, that create the demand for even more specialized technology-related skills.

Other kinds of tech are also developing in the area, such as renewable energies, and even genetics. BioOhio (formerly Omeris) is another tech-based non-profit driven by the Department of Development, working to “accelerate bioscience discovery, innovation, and commercialization of global value.”

Headquartered in Columbus, BioOhio also has regional offices in Cincinnati, Cleveland, and Athens.

“Innovation is just not about technological business,” said Tim Haynes, Vice President of Membership Services and Marketing at TechColumbus, a nationally-respected technology incubator with 26 tech businesses working under its umbrella. “There’s a lot of businesses here in the region, like insurance and financial services, that are driven and enabled by technology – information technology in particular.”

For example, job placement website Indeed.com lists more than 6,000 open jobs for people in the information technology field in Columbus.

Even with our educational assets, Haynes identified a “skills gap” in the community. Qualified IT workers are difficult to find, even as demand continues to grow – but that doesn’t stop businesses from coming to Columbus.

“We have a 61-percent greater concentration of IT workers than a similarly sized city across the country,” explained Haynes, citing the U.S Bureau of Labor statistics. “If others have 100, we have 161 for the same size economy – that alone is attractive to a technology-based business.”

Policy Transformer

Even with heavy hitters such as Battelle, today’s struggling economy means that there are a lot of places competing for jobs as though their lives depend on it … which they do. Ohio, which for years had been ranked poorly in terms of overall tax burden, began an aggressive business tax overhaul in 2005, with the last pieces of the puzzle just falling into place this year. The new structure did away with the old corporate income tax, replacing it with a .26-percent commercial activities tax on gross receipts over $1 million. Removing the corporate tax and exempting inventory and equipment have made Ohio extremely attractive to tech companies, for which equipment is already costly.

The state also offers a Technology Investment Tax Credit: it gives investors a 25-percent reduction on their investments in qualified technology-based Ohio companies, lubricating the wallets of venture capitalists and so-called “angel investors,” those who invest specifically in start-up businesses.

Pentland believes that, while such incentives are well and good, they are rarely enough to build an infrastructure on their own.

“In my view, most of it is wasted money,” he said. “It just doesn’t work that way. I’m from St. Louis, and they’re always trying something new to resuscitate that dream, all the incubators and so forth … I can’t tell you how many dry up,” he said. “I don’t think that policymakers can make innovation happen. They can create an environment where it’s allowed – but that’s not always enough. It’s not that tangible,” said Pentland. “You can’t just build a bunch of coffee shops and expect the geniuses to come.”

Pentland said that Columbus already has that more “intangible” part of the equation, with the tremendous intellectual property here at Battelle and at OSU.

“It’s not just coffee shops, it’s a shitload of money and smart people who know how to spend it. That’s why the military and innovation centers go hand in hand,” he said.

Brad Griffith, a local tech entrepreneur whose business, Buckeye Interactive, helps others develop technical strategy for their websites, fully expects Columbus to be one of the most recognized tech cities in the U.S. in the next decade.

“Columbus as a whole is definitely making great strides toward supporting start-ups and tech innovators through TechColumbus, the 10xelerator program from the Fisher College of Business and several other Third Frontier programs,” said Griffith, referring to the state’s progressive program to increase technological companies, products and jobs, which began in 2002.

Griffith also noted that Columbus is home to the nation’s largest angel investor group, the Ohio Tech Angel Fund, which provides investment capital for information technology, advanced materials research and development (such as nanocrystals) and medical technology.

Other funds available to technological start-ups include the TechGenesis Grant Fund, which gives 12 grants of up to $50,000 to local technology entrepreneurs with the best start-up ideas.

Ohio Third Frontier’s Pre-seed Fund Capitalization Program distributes grants to help technology-based business investments, and also provides much of the funding for TechColumbus.

Created in 2005, TechColumbus is the merger of two already established organizations: the Business Technology Center (BTC) and the Columbus Technology Council (CTC). TechColumbus received a $15 million grant from the state and $7.5 million from partners around the region to extend the outreach to 15 counties in Central Ohio for early stage funding. In five years, they’ve worked with over 1,500 companies and directly funded 110 local start-ups.

“The CTC piece is still funded through memberships, events and sponsorships,” said Haynes. “We want to bring the whole innovation community in Central Ohio together to catalyze it forward and strengthen itself, so the membership program is a way to get companies in this region involved.”

Version 2.0: Silicolumbus

Although TechColumbus and others are working to create mentorships between established technological companies and the new start-ups, the relationship between the old and new could be our city’s weakest point in moving forward as a tech hub. Many of those we spoke to suggest the challenge is not a lack of opportunity or innovators – it’s simply a matter of how we connect them.

“The biggest challenge we have is working to knit and braid all of these assets together,” said Kenny McDonald, Chief Economic Officer of the Columbus Partnership, a group of business and community leaders, including Limited founder and CEO Les Wexner and OSU President E. Gordon Gee, dedicated to promoting Columbus as a destination for businesses looking for a “freethinking workforce.” McDonald is also the chief architect behind Columbus2020!, a regional campaign attempting to leverage the area’s research and academic assets to attract more national business.

“You’ve got 140,000-plus college students, you’ve got terrific intellectual assets being generated by that population; you’ve got OSU and Battelle doing unbelievable work in life sciences and homeland security, you’ve got all kinds of tech companies already here, and quite frankly, you’ve got tech embedded in the Fortune 500 companies located here,” he listed. “So, I think it’s, ‘How do we tell the world that we have all of that?’”

Matt Martindale, a 30-year-old entrepreneur who moved to Columbus from New York City, had apparently heard that message. He echoed Pentland’s assertion that certain intangibles could come together and just make a place “work.”

“Philosophically, I believe if you build a great product or provide unmatchable service, it doesn’t matter where you are,” he said. “Where there’s more volume, there is also more crap. What makes the tech scene more attractive here than some other places is a 100 percent opportunity to become a great, influential company or individual in a large and growing city,” he said.

Martindale, who spent time at digital-marketing giant Resource Interactive (whose first client was a little computer company named Apple), worked for several start-ups in Columbus before founding the popular locals-only social-networking site, Cbusr.com. He now he has irons in even more fires, as he is in the works to expand the Cbusr concept to other cities under the umbrella of HelloNearby.com.

“What entrepreneurs do now in Columbus will have great impact on what defines the city’s start-up culture. For my company, we see an opportunity to become the greatest Internet-technology company Columbus has ever seen,” he said. “That’s pretty motivating to wake up each morning and imagine.”

Another local tech entrepreneur, Mark Gilicinski, founded Mobile Expeditions LLC thanks to the 1492 accelerated program offered by TechColumbus, and now creates smartphone apps for clients such as Celebrity Cruises and COSI. He says that while the city has a lot of resources that helped him to start his business, improvement must be made if Columbus is to take the next step as an elite tech city.

“I think a couple of big things that would help would be more opportunities for investment dollars,” he said. “I know it’s happening, but there could be more, and they could be better. It seems like it is really hard for the start-ups to get the attention of the Nationwides and Cardinal Healths that are around, that could use our goods and services.”

“We’ve got to have the capital for [innovators]; we’ve got to connect them with that potential, we’ve got to connect them with a customer,” agreed McDonald. “We’ve got an awful lot of very large companies here that are potentially great customers.”

Somewhat in contrast with Gilicinski, McDonald believes that the city’s hometown size and feel are a boon for local entrepreneurs.

“Because it’s such a small place, getting in the door with the major players here is not that difficult, so I think we actually have a better chance of doing that than you would in other places,” he said. “And, quite frankly, we have enough of a scale of that here that it makes us a big place as well.”

“There’s larger tech companies doing innovation; that definitely helps,” he said about Columbus being a technological hot spot, but he added that collaboration between local industry giants and entrepreneurs “is the best possible world.”

Pentland said that, for developing the city’s future, understanding the actual role of the large research drivers such as Battelle will be important in successfully tapping into them as resources.

“It’s a brain trust, but it is not a jobs empire,” he observed. “Battelle is a research management institution, like a university on steroids. They’re not Google. They create the algorithm Google is made out of.”

“The question is more whether Columbus will be able to leverage all of that,” he said. “The thing about Silicon Valley is they got all those businesses to build their headquarters there; can Columbus do that? I don’t know.”

With so many metropolitan hubs trying desperately not just to save disappearing jobs, but to anticipate future career trends, Columbus seems to have been lucky enough to pull ahead of the pack. Tech is also, as Massey noted, likely around to stay.

“I don’t think it’s ‘trendy’ so much as that’s the way the world is going,” said Massey. “Any prescient business will get itself in the path of the way the world is evolving and transforming.”

Dan Williamson, spokesperson for Mayor Michael B. Coleman, acknowledged the profound effect that major drivers like Battelle and OSU have had on building the tech sector, but added that the city itself is part of the reason tech jobs are coming here.

“Columbus is becoming known as a brain magnet for young people,” he said. “We’ve managed to reverse the brain drain.”

Williamson mentioned that the city has worked hard to bring tech businesses to Columbus, citing the new Tech Center South campus that will soon be redeveloping the Techniglass factory on the south side of the city. According to Williamson, the city is attractive in its own right, as well.

“People want to live here because there are good jobs here and it’s a good place to live,” he said. “I’m not sure which happened first … the mayor believes the best thing you can do to create jobs is to have a high quality of life; what he specifically does is look at ways to build our quality of life in a way that attracts young, talented people. That’s one of the reasons he’s invested in bikeways. Young people who want to move to a city, a lot of them care deeply about access to bikeways. That’s one example of ways we are raising our overall quality of life.”

“What are young professionals going to want?” he asked. “Because they are the ones who are going to make our city successful, not just right now, but for years to come.”

“No one is going to want to do business, no matter what incentives are offered, in a place they don’t want to live.”

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