Twice in the last 20 years a budding technology culture has sprung up in northwest Ohio only to be dealt setbacks when the region’s shining tech stars were gobbled up by bigger companies.
But northwest Ohio’s tech culture is growing once again. And some think this third version may be the one that can survive the loss of a breakout star and keep plugging along like the tech cultures in Silicon Valley, Austin, and Ann Arbor do.
“There’s a sea change in what’s happening, and it’s refreshing to see,” said Molly Reams Thompson, director of the University of Toledo’s LaunchPad Incubator, which has 19 information technology start-ups — a growth of 400 percent over last year.
“It’s really a testament to a renewed support of entrepreneurship and the start-up world and the collaboration that’s happening in our region,” Ms. Reams Thompson added.
“The same ‘meet-up’ culture that exists in Mountain View, Calif., is similar to what’s happening here,” said Dan Paquette, chief marketing officer of Petrichor, a Toledo software start-up that is starting to attract interest from investors. “You can sort of see these templates for entrepreneurship forming, and they really are growing all over the Midwest,” he said.
In the late 1980s and early 1990s, Fox Software of Perrysburg gained national attention as a top producer of database software. Fox’s reputation attracted top information technology talent to the area, launched a miniboom in software start-ups, and fueled the growth of the local IT culture.
But it was pruchased for $173 million in 1992 by Microsoft Corp., which moved the company’s 150 employees to Seattle and killed the momentum of the region’s IT culture.
Then in the late 1990s in Findlay, Solomon Software Inc., which made software for small and midsized firms involved in online purchasing, fueled another tech rebirth in the region. But in 2000 Solomon, which had 380 employees, was bought by rival Great Plains Software Inc., of Fargo, N.D., for $142 million.
Great Plains agreed to keep Solomon in Findlay, but 10 months later Great Plains was bought by Microsoft. The Seattle-area software giant agreed to keep the Solomon unit in Findlay, eventually renaming it Microsoft Dynamics SL.
And while Solomon’s key development team still operates in Findlay, quietly housed in a small headquarters building with a couple dozen staffers who help with sales, technical support, and product development as Plumbline Solutions, once again the region’s IT culture stalled.
Another blow struck in 2003 when tech organizations such as the Information Technology Alliance of Northwest Ohio and Regional Technology Alliance disappeared and seemingly took the region’s IT community along with them.
But slowly during the last 10 years like-minded groups of IT people began gathering, first just to talk shop and have a few beers. Later they begin holding organized events and inviting speakers. That led to networking and idea exchanges that could form start-up firms.
Rocket Ventures, the venture capital arm of the Regional Growth Partnership, said it now funds 11 start-ups, all with IT industry connections, that employ 95 people and have a combined payroll exceeding $13.4 million.
More importantly, the northwest Ohio IT culture recently began producing some budding “stars” once again.
Findlay’s CentraComm, which secures, manages, and hosts high-performance IT networks, recently made the Inc. magazine list of the 5,000 fastest-growing firms for the eighth consecutive year. The group began in 2001 with four people but now employs 34.
Toledo start-up Roost software, which focuses on Web and Web browser “push” notification technology, was chosen this summer for the prestigious Y Combinator mentorship program in Mountain View, Calif., a “seed accelerator” program that helped develop tech giants Reddit, Dropbox, and Zynga.
Earlier this month, DocuSphere, a Perrysburg firm whose technology helps streamline accounts payable software, was purchased by London’s Tungsten Corp.’s Tungsten Network, which will use the local firm to enhance its global trading network.
“What’s different now from before [Fox and Solomon] is that IT is more prevalent in everything we do,” said Bob Savage, Jr., chief executive officer of Rocket Ventures, which in July restarted its “TechConnect” IT networking event after a two-year hiatus.
Previously, a company had to move to San Francisco’s Bay Area or Austin or Seattle to make it big.
“Now it’s easier to build IT companies here than it used to be,” Mr. Savage said.
“Not all of our successful companies are going to stay here, but now we have a better chance of keeping them here,” Mr. Savage added.
Another change from past years is it now is easier to start an IT firm.
“This is a golden time to start a software business,” said Jeff Beamsley, a former CEO of Hilgraeve software in Monroe and now an “Entrepreneur in Residence” with Rocket Ventures.
“It’s never been easier to start a software business because the initial costs are really low, the distribution portion of the business is already done for you, the online stores already exist, and for an application, it costs 30 percent [of profits] to have the app distributed by, say, Apple, and only a couple of thousand to build it,” Mr. Beamsley said.
“With the online infrastructure already there, someone can build a really credible smart-phone app in months,” he said.
“It’s more a question now of idea, talent, and to a lesser degree, funding and mentorship,” he said.
Home to Roost
Roost is a product of the reborn northwest Ohio IT culture.
Burton Miller, one of Roost’s three co-founders, spent a dozen years in Seattle before fellow co-founder — and Toledoan — Tim Varner convinced him to come to Toledo in 2012.
What Mr. Miller has seen since is encouraging.
“I guess in the two years I’ve been around here I’ve definitely seen more people doing tech stuff,” he said. “I recently met another company [Petrichor] that would be interesting wherever they would be doing what they do, even in Silicon Valley. I think the tech scene is brewing, and it’s better than it was two years ago when I first started talking to people.”
Roost operates from UT’s LaunchPad Incubator, which will host on Oct. 9 its third Pitch & Pour — an event where five budding entrepreneurs will get to pitch their business ideas to potential investors.
In the post-ITANO period, events such as Pitch & Pour were nonexistent. The region’s IT flame, however, was kept alive by a few passionate individuals in the area who had remain convinced that northwest Ohio one day could become a sustainable tech region in an IT triumvirate that includes Detroit and Ann Arbor.
Keith Instone of Maumee, a former IBM professional and now a freelance consultant, is one of those individuals working to nurture and unite the IT community.
“After ITANO died, we were screwed,” Mr. Instone said. But Mr. Instone said he and IT professional Stuart Bertsch decided to do the job themselves.
“We got together to build up networking again. And we spent spent six months holding meetings and tracking down various other groups,” Mr. Instone said. “As I would hear about a new group, we would end up merging,” he said.
In 2012 Mr. Instone said the IT culture got a huge boost when Seed Coworking opened in Toledo’s Warehouse District.
Seed, founded by IT professionals Gene Powell, Jamie Wright, and Don Miller, offers budding entrepreneurs a desk, wireless Internet, conferencing rooms, and other amenities on a membership basis.
“Seed Coworking gave us all a place to hang out,” Mr. Instone said. “Seed has been a catalyst.”
Mr. Instone and Mr. Bertsch also launched Tech Toledo, a networking group to connect area IT people, but more importantly, they help improve and bolster a calendar of events Web site, ToledoTechEvents.org, created by local tech professional Jason Slagle.
The Web site acts as a clearinghouse for any meeting or event in the region that may interest the IT community.
“Maintaining the calendar is one of the things that’s helped. Usually a group forms because they just want to get together occasionally to talk, but most groups now are at a monthly pace with meetings and a guest speaker a month. They are social events but also learning events,” Mr. Instone said.
‘A cool vibe’
Mark Robinson, chief executive officer of CentraComm, said he is encouraged by the tech community’s renewed spirit. He was at the TechConnect event in July and came away excited by the turnout.
“That kind of had a cool vibe to it,” he said.
When comparing northwest Ohio’s tech environment to Detroit and Ann Arbor, the shortcomings are apparent, Mr. Robinson said.
“Ann Arbor has a very bureaucratic way of getting money for start-ups. And Detroit is like the Wild West. You can have incubators popping up tomorrow in a warehouse,” he said.
In northwest Ohio, Rocket Ventures is the main catalyst for funding, Mr. Robinson said. But just as important is a sense of community, he added.
“The idea of ‘Hey, let’s get together as IT guys.’ I think that’s what was lacking in the past. That’s good for all of us,” Mr. Robinson said.
Regular gatherings held by IT groups are doing more than just fostering a sense of community. It is creating start-ups.
Mr. Paquette of Petrichor met his two business partners — Jake Warner and Alexander Mattoni — at a “meet-up” of Toledo Web professionals.
They started Petrichor in early 2013 and lately, it has caught the eye of Rocket Ventures and LaunchPad.
Petrichor produces software that can automate a business’ various software processes. Because its product is cloud-based, the company can operate in Toledo but still serve clients far away.
For now, Petrichor, with just two employees, operates out of a room in a house. But that doesn’t mean the company needs to be elsewhere to grow.
“What it comes down to is how cheap it is to procure the computing resources needed to do technologically sophisticated work,” Mr. Paquette said. “Toledo doesn't need a tremendous data center to do extremely sophisticated work.”
There are drawbacks, however.
“Your access to resources and mentorship is slimmer here than many other places,” Mr. Paquette said.
And the company’s three co-founders have discussed whether they might need to be elsewhere to succeed.
“We’ve debated it, and we believe we will be able to do this in Toledo,” Mr. Paquette said.
Almost there
At the other end of the spectrum is Roost, which is on the cusp of making it big.
Roost’s Mr. Miller said the nature of the company’s product means soon it will need sales offices in New York and maybe San Francisco.
“Having a sales presence in those areas is critical,” he added.
But Mr. Miller said Roost can stay in Toledo. “
There’s a strong chance we’ll keep people in this area for quite some time. …I don’t think it makes a difference where the corporate headquarters is,” he said.
While evolving technology makes it easier to conduct IT operations from anywhere, Mr. Beamsley said other critical factors are needed to raise the region’s IT profile.
High on the list, he said, are a mentorship infrastructure, more early stage investment money, and most importantly, a culture that can tolerate failure.
“In the early stage, you’ll have 1 in 50 start-ups that are successful. When they get venture backing that goes up to 1 in 10,” he said. “So what happens to the other nine?
“Well, what happens to those people in areas where there’s a healthy start-up culture is that those people that failed just go start another company and they’ll still get money and still get advice,” Mr. Beamsley said.
That’s because other areas have wealthy investors who understand that most start-ups will fail, Mr. Beamsley said.
“But they also understand that if they pick good people, they eventually will have some investments that will become successful,” he said.
“Those investors are saying that they really don’t know anything about these companies they fund, …but they can afford to lose on 50 of them because they know a few others will make up the difference,” Mr. Beamsley said. “We don’t have quite the same investment infrastructure here, but the good news is we’re growing it.
“And as we have more successes, we’ll start creating this cadre of mentors that say you can stay in Toledo, Ohio, and be successful,” he said.
Contact Jon Chavez at: jchavez@theblade.com or 419-724-6128.
First Published September 21, 2014, 4:00 a.m.