Layering the technology ecosystem

Madison is on the right growth path, but plenty more can be done to build out the local technology ecosystem. We present 10 ideas from local executives.

From the pages of In Business magazine.

What more needs to be done to build Madison’s technology ecosystem? Whether it’s more of a risk-taking attitude, greater diversity, or more coordination with local schools and their curriculums, local thought leaders have plenty of ideas to keep the tech momentum building.

That momentum has national organizations noting that Madison is punching above its weight when it comes to technology growth. A new study by the Progressive Policy Institute puts Madison in a group of 35 metropolitan areas — at number 26, to be precise — with a thriving, tech-driven startup scene. However, momentum can be blunted without consistently applied focus, so we reached out to local technology executives, economic development professionals, and educators to get their take on what can be done to go beyond maintaining the status quo.

In so doing, we came across a couple of schools of thought. One holds that while we have some work to do, we have established several of the most essential components of such an ecosystem and we can build upon them. “When you look at the menu of assets and activities that a region needs to compete in this space, we would maintain that we’ve checked most of the boxes, but each of them have a different maturity, density, or success level,” notes Paul Jadin, president of the Madison Region Economic Partnership, or MadREP.

The other school holds that Madison is only scratching the surface. Max Lynch, CEO of Ionic, a Madison technology firm that develops platforms for the development of mobile apps, has blogged about Wisconsin’s low ranking in startup activity, as cited in the 2016 Kauffman Foundation report, and he believes Madison has a great deal of work to do in ecosystem-building areas such as affordable medical insurance, the lack of diversity in the technology industry, declining university support from the state, and even social progressivism.

“For some reason, Madison is seen by the rest of the state as a technology leader to a very large degree,” Lynch notes, “but it’s funny because when you actually compare it to the rest of the country,
we are so, so far behind.”

Both views acknowledge that ecosystem work is never really done, so here are 10 technology industry recommendations for accelerating entrepreneurship.

1. School ’em

Focusing on our schools in ways that stimulate interest in the hard sciences such as robotics and engineering will go a long way to building the most essential ecosystem element — the next-generation workforce. “This is not only for preparing the future generation to be part of the tech community as an employee, but also to have schools where engineers want to send their sons and daughters to expose them to the hard sciences and STEM (science, technology, engineering, and math),” says Scott Resnick, vice president of Hardin Design and Development and entrepreneur-in-residence with the entrepreneurial hub StartingBlock Madison.

Unfortunately, robotics clubs and competitions are somewhat expensive to run, which is why bills have been introduced in the state legislature to provide grant money to public schools that sponsor robotics competitions. Resnick wholeheartedly endorses them because neighboring Minnesota, which has put some economic distance between itself and Wisconsin because of its tighter embrace of technology, has such clubs in greater numbers.

Jadin also believes that Madison has some work to do in this area. He cites growing technical investment in public schools, particularly a $25,000 state grant incentive that only handful of local schools have taken advantage of thus far to build out technology space for equipment such as 3-D printers and laser printers. Jadin likens such spaces to “Sector67 right in the schools,” and by reinvesting in technology in the schools, he believes students will be encouraged to pursue related disciplines and that will translate into a more diverse, available pool of students for technical colleges and universities.

“We need to continue to nurture the relationships with K–12 and higher education to guarantee that we are providing curriculum and classroom capacity to continue to serve the demands of the sector,” he states.

2. Accelerate diversity

The 2016 Workplace Diversity and Inclusion Survey, conducted by MadREP, shows the vast majority of local employers haven’t even taken the necessary first steps toward establishing a “D&I” program. In the survey, which was sent to a random sample of 2,474 employers, 86% of respondents acknowledged they do not have a written diversity statement, and 90% do not have dedicated full- or part-time staff to drive diversity and inclusion within their organizations.

While women are pursuing jobs in the tech fields, the lack of a pipeline for people of color isn’t helping matters. Resnick says former Madison School Board member Ed Hughes once shared with him the lack of diversity in advanced placement classes in computer science. Even more woeful was the low number of people of color statewide taking and passing the exam for advanced placement in computer science. “I want to say two years ago, it was under five,” Resnick recalls. “So when you talk about issues of diversity in the technology field, when you only have five high school students statewide taking the exam, it’s no surprise that by the time they are at employment age, we simply don’t have a robust number.”

The Madison School District has identified increased access to AP coursework as goal No. 2 in its District Strategic Framework, so at least the ball is rolling on this aspect of the digital divide.

Ashley Quinto Powell, business development manager for Bendyworks, a custom software development company in Madison, and a co-organizer of the 900-member Madison Women in Tech, notes that diversity is a challenge everywhere but adds that Madison is at least aware of its diversity challenges and people here “are very conscious about trying to improve that.”

Quinto Powell cites a host of local coding camps and engineering camps that make a big difference for getting more girls interested in technology. “We’re starting to see that it’s really cool to be in technology,” she says, “and women in technology are very conscious of being available and visible so that girls can see themselves in technology.”

A Chicago native who moved to Madison in 2008, Quinto Powell points to a distinct advantage that Madison can build upon when diversifying its technology workforce, and that’s the willingness of local employers to respond to employees’ need for work-life balance. “We don’t find this on the coasts,” she states. “This morning I happen to be home with my kids, and I’ve been traveling for the past week and nobody batted an eyelash at me when I said, ‘I’ve been traveling for a week and I’d like to spend the day with my kids.’ I think that’s much more common here.”

As a Madison alder, Resnick championed the creation of the Women and Minority Entrepreneur Fund, now being fulfilled by The Doyenne Group. He cites St. Louis, Mo. as a community that pioneered the cause of getting more women into the tech entrepreneur scene and “some people would say simply by introducing more women into the scene it became one of the best cities in the world for women entrepreneurs. We started to see incredible growth in St. Louis.”

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3. Bolster university support

Part and parcel to driving diversity is reversing the recent trend of state budget cuts, and before that declining state support, for the University of Wisconsin system and UW–Madison in particular. Lynch notes that Wisconsin, as a whole, is not a very diverse place, but UW–Madison is one draw for people outside of the state and country to come and live here. He also reminds state lawmakers that the most robust technology ecosystems are built around world-class universities, citing Stanford and Silicon Valley as a prime example.

“If you look at technology and you look at the makeup of technology, so much of the value is being created by immigrants, by people who aren’t born here,” he notes. “So if you’re going to extrapolate and say that people are going to be a huge driver of the technology ecosystem, you need to do whatever you can as a state to encourage them to come here, and UW–Madison and our universities are pretty much all we have as a state to get people here and increase diversity here.”

4. Bridge the generation gap

Michael Barbouche, founder and CEO of Forward Health Group, says Greater Madison is tailor made for the development of health care technology, given local assets such as integrated health systems and value-based care models that are well aligned with provisions of the Affordable Care Act; leadership in health information technology as evidenced by local health system adoption of Epic medical records (not to mention the presence of Epic, itself); and a high quality of life that includes a more affordable cost of living than found in other technology hubs.

In his view, one thing that’s missing is more opportunities for inter-generational mentorship. “We need to pair up the young kids and their endless energy with some of the older people that actually know how to fix things,” Barbouche says. “We’ve got to get those two worlds together because I don’t think you’re going to teach the over-40 crowd how to become real good Python coders, and I don’t think you’re ever going to be able to teach the under-30 crowd how to fix long-term care or fix any aspect of care coordination. If you get the two to come together, that would be really powerful.”

Resnick believes Madison needs to do a better job leveraging non-tech entrepreneurs, and that includes people over a certain age. “So often, we’re focused on ‘Is this a technology-based company? Is this entrepreneur right out of college?’ Well, the reality is that some of the strongest entrepreneurs are ones who have been inside the industry for many, many years,” he notes. “You can go down the list of when you are most likely able to start and have a successful startup company. The age is very rarely at 22, even if you have enough industry knowledge, so simply by leveraging more of the population and encouraging them into the startup game, we would start to see growth by leaps and bounds.

“Similarly, when there are many folks in the community, once they do retire, who could still give back to a young company — whether it’s in mentorship, guidance, or connections. We have to make sure that folks at that level are re-engaged with the next generation of companies that are coming to the Madison area.”

5. Grow the gamification

In Jadin’s view, the region could do more to blend the Madison Games Alliance subsector with the information communication technology sector in general, and start graduating more college and technical school students — between 50 and 100 more each year — in the area of game development. “In so doing we show greater density and transferability of talent, which will make it easier to lure more non-Epic workers who want to be comfortable that, if their employer hits a downturn, they will have a safe landing elsewhere in the region,” he says.

Forrest Woolworth, COO of PerBlue, a Madison gaming company, notes that game development can be an employment avenue for the spouses of new Epic hires from outside Greater Madison. “I think in particular of people who are relocating to Madison for a potential position in games or in technology, that having more density and having a more established ecosystem of technology companies can reduce the amount of relocation risk,” Woolworth says. “That’s one of the reasons why we want to position Madison as a game-development hub. There are gaming companies that exist, there are opportunities that exist, and not just at PerBlue, and if there’s an economic downturn there are other companies here that can absorb tech workers, as well.”

6. Advance social progress

One is tempted to think Madison has checked off each box in each measure of social progress, but work still needs to be done on matters such as the availability of day care and general social progress. “The day care issue becomes more and more fascinating as I’m reaching a certain age,” Resnick admits. “Once you get to a certain age, having children and making sure you have affordable day care options — that’s very difficult in our central core. The wait list at certain places like Red Caboose is quite long, but ensuring that we have day care options, as well as things like affordable health insurance and general social progress, is important.”

On the subject of health care, there are tech entrepreneur centers that have their own insurance exchange for health and other services. Resnick cites 1871 in Chicago, where people can buy health insurance through their technology hub, which is similar to getting medical insurance through an industry association. “If you are a single-person company and you’re trying to decide whether to go on the public exchanges, you may have three employees. How do you focus on health insurance?” Resnick asks. “Their startup hub now helps you with health insurance. I found that was a major barrier for folks deciding whether or not to start a company.”

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7. Amp up the music

When you look at the culture of a city, it comes back to the music scene, the art scene, and the food scene and how they reflect the authentic character of a community. Resnick has yet to hear one municipal leader say, “We want to be the last place entrepreneurs show up.” Everybody wants to climb on the innovation bandwagon, but cities that are able to tie that into their culture are having the most success.

Historical case in point: With the international success of bands such as Nirvana and Pearl Jam, the grunge alternative rock movement — aka the “Seattle Sound” — blossomed into a musical force in the early 1990s and was central to Seattle’s growth as a cool city for young professionals. Resnick believes Madison has similar potential to leverage music as a lure, especially with new music venues like Frank Productions’ The Sylvee, which like StartingBlock Madison will be part the Cosmos project on East Washington Avenue.

“There are a number of research papers that say Seattle is important for the engineers, but it was the music scene that was also growing during the 1990s that kept the engineers in Seattle,” Resnick notes. “I see that in Madison’s food scene, as well as our now budding music scene.”

Jadin agrees that Madison must continue to show the community and region are cool, inviting, and inclusive for all. “It will help if Forward Fest continues to grow and if we can have a very successful inaugural games development conference in October,” he notes. “These are also the kinds of things that shine a light on the density of our ecosystem and on the millennial-friendly nature of the region.”

8. Transport for tech

Understanding the need for what Resnick calls millennial transportation — bike, rail, air — and knowing that millennials and tech leaders in general are pushing for options such as electric vehicles, is another piece to the puzzle. “Tesla still is one of the more popular companies among our group, yet Tesla vehicles cannot be purchased in the state of Wisconsin,” Resnick states. “That’s a state of Wisconsin issue that needs to be overcome.”

In addition, focusing on the direct flights out of Dane County Regional Airport and the cost of those flights is another major issue, particularly with the lack of rail. Woolworth talks about the need for direct flights to the technology nexus of San Francisco, noting the company’s digital ads are placed on Bay Area-based platforms such as Facebook. “A lot of those ad partners are located in San Francisco,” he notes. “We have relationships with those folks in those companies, and so maintaining those relationships comes down to travel.”

Others cited access to Bay Area investors and workforce talent, but the need for direct flights and expanded service is not lost on local economic development leaders. Deb Archer, president and CEO for the Greater Madison Convention and Visitors Bureau and the Madison Area Sports Commission, notes the GMCVB works with the airport to accommodate large groups for the Epic Users Conference, World Dairy Expo, and Ironman.

Archer also notes that air travel has changed dramatically with the proliferation of regional jets and carriers. “We have been fortunate to see non-stop service added to cities like Denver, Charlotte, and Salt Lake City,” she says, “with other additions potentially in the works.”

9. Accommodate affordable tech solutions

Madison is a community that embraces services such as Uber, Airbnb, and next-day delivery services, but they are controversial. There are a number of different technology products and solutions out there, and Resnick says they must remain available for the sake of affordable business operations.

“One of the reasons why Airbnb is more popular is that it’s a cheaper option for folks to travel to conferences and enjoy Madison, particularly prior to having a family,” Resnick notes. “The reason this is front and center for me is there is a large entrepreneurial conference that’s run by Kauffman, and right now I’m chatting with six different leaders from across the country about grabbing an Airbnb room together and sharing a house while we’re all in Kansas City. It reduces the cost to go to that conference from what would probably be $1,200 when you get to hotels, food, and transportation. That probably eliminates $600 for each of us.”

10. Access more capital?

The comparative lack of local capital formation is an area of disagreement among tech executives. While entrepreneurs often cite the availability of capital as a hindrance to technology development, others view that as an excuse. Lynch, whose company has attracted funding support from outside investors, says those who only rely on local investors aren’t fundraising the right way. “Even if you’re in San Francisco, you have to talk to 20 or 30 or more investors to get that first check,” Lynch notes. “My advice to people is to build companies that are interesting, forget the local angle, and go out and find money purely on the merit of the company you’ve built. So, yes, you’re going to have to fight the fact that Madison is a relatively new place to build a venture-backed company, but you can point to companies around the state that are proving that whole perception wrong. Look at the investors who are open to that, and don’t waste your time on someone who is only interested in investing in San Francisco.”

Lynch says Madison tech firms should be open to remote workers, especially when they scale up from developers and engineers, which are plentiful here, to the point where they need more experienced managers and product people, which aren’t as numerous in Madison. It’s also important to be open and honest with investors about that fact. “My advice to people who are trying to fundraiser outside the state is to be open to things like letting your investors know that you will find those people,” he states, “and that you understand that it’s going to be a little bit harder. Don’t be too insecure about it because it’s just not a positive way to start the relationship.”

Those human resources

In general, Madison must become a community with more resources, according to Lynch. “In some sectors, it is a numbers game. We need more people here, we need more people here starting companies, and that’s what you see in San Francisco. It’s not necessarily true that every company there is a better one, but you have more people around to start them. We have the foundation but what we really need is to just grow. We need to be a place where young people want to live, and it must be a place where smart people want to come and attend the university. The rest will figure itself out.”

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The education of technology

The Madison Metropolitan School District’s effort to integrate technology into its curriculum has evolved not so much in response to the community’s desire to build a technology ecosystem, but simply because it’s part of what a modern education curriculum should include.

Whatever the motivation, the district continues to build its digital learning environment and coursework. Beth Clarke, director of technology and media services for the MMSD, prefers the term digital learning, which reflects a more holistic approach to digital literacy.

In the past, when technology was introduced into a classroom, Clarke says some of it was for technology’s sake without much consideration for learning targets and assessment tools. Today, more thought goes into learning standards and the assessment of which technology tools or devices work best for individual students. In fact, there is more emphasis on personalized learning and formative assessments — to the point where each student has his or her own learning profile.

“When we were growing up, we did tests at the end of chapters and so on, and now kids are actually getting feedback every day on where they are at with their learning targets,” Clarke notes.

By next fall, 50% of the schools in the district will have implemented what she calls “a digital culture.” That digital environment will include access to one device in particular — a Chromebook computer — which is important for economically disadvantaged students who otherwise would face a digital divide.

One of the goals of the people in the technology industry is to diversify their workforces, which means getting more young women and people of color to pursue careers in the so-called STEM disciplines. Clarke has detected more interest in this subject matter among young people in these demographics, and the district is now working to build a STEM curriculum. One example is Project Lead the Way, which is STEM focused on engineering in the middle schools and has drawn interest from teens in all focus groups. “I think that because they’re being exposed to these digital literacy skills, they are demonstrating more interest,” Clarke says. “We have seen more interest.”

The district has an advisory committee that meets quarterly and recommends programming adjustments, as needed. At the moment, there is a strong presence of coding in the computer science curriculum. “We’ve done a lot of research both inside and outside of our community, as well, as far as best practices,” Clarke explains. “What are businesses looking for in students who are graduating? What are the skills and aptitudes our kids need? Our Pathways program that’s launching next fall is really going to deep dive into that.”

Resnick’s rejects

As he was piling up Post-it notes on how to grow Madison’s technology ecosystem, Scott Resnick also came up with some things for his “not needed” list — things that, in his estimation, won’t move the needle very much in building the local technology industry. Here are five ideas for the circular file.

1. Doing events for the sake of doing events. The growth of events such as Forward Fest is encouraging, but at this point “we have a surplus of events that are occurring in Madison every single day,” Resnick says. “I recently was asked, ‘Should we do another Startup Week?’ My answer was nope. At this point, we’ve reached that surplus.”

2. More high-end apartments. When it comes to creating startups, you’re looking for folks who want to live affordably. “When you’re starting your company, you don’t have the excess resources very often to pay for a luxury apartment downtown, Resnick notes. “We have been sold into this vision that high-rises help the startup community, and I have yet to see research that proves that point.”

3. Complaining about capital. Some say if we just had more capital in the region that would solve most of our problems. Not so, according to Resnick. “We’ve had companies that have been able to raise capital,” he notes. “What we need is more good ideas.”

4. Tax breaks. According to Resnick, tax carve outs are rarely the reason why technology executives choose a particular location. “There are more stories of that being a very temporary fix or in the case of LivingSocial, where Washington, D.C. gave them a very large tax incremental finance [TIF] subsidy to locate and move downtown, no fix at all,” Resnick notes. “LivingSocial was just acquired by Groupon for about $1 after being valued at $6 billion not so long ago, so there are many examples of tax breaks failing in the end.”

5. Fiber to the home. The notion that if Madison creates a “gigabyte city,” that will spark more entrepreneurship, has been undermined by Kansas City’s experience. “Kansas City just proved that was not the case after building out their Google fiber network,” Resnick states. “It hasn’t held through, so those are some of the things on the ‘doesn’t-help’ list.”

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