Tech Business Leaders Compare Madison to Other Regions

Madison, Wis. – Madison’s high-tech economy has yet to hit its growth spurt… so what’s taking so long? According to local technology executives, Madison has what it takes to support a high-tech business community, but often ask, “Why isn’t Madison as successful as other regions?”

Accelerate Madison, a local group that focuses on developing Madison’s business climate through information technology, hosted a forum to address these issues at its monthly meeting at the University of Wisconsin-Madison’s Fluno Center. Paul Peercy, dean of University of Wisconsin-Madison’s College of Engineering, moderated a panel comprised of four business leaders who have lived and worked in other technology-heavy cities and currently have businesses located in Madison. The panel discussed the advantages and disadvantages of growing a technology-based business in Madison.

One of the biggest hurdles and assets local companies face, according to the panelists, is Madison’s talent pool. Supplemented by the university, it was described as high potential, but not without weakness.

“This is the only place I’ve been where I had a discussion about ancient Greek mythology and atomic microscopes with cab drivers,” said Timothy Stultz, chief executive officer and president of Imago Scientific Instruments, in reference to the qualifications of Madison workers.

However talented the workforce may be, the lacks of technologists are a weak spot, according to Gary Gigot, a venture partner for Frazier Technology Ventures. He commented that while operating management is “scattered but recruitable,” Madison lacks an abundance of engineers and chief technology officers. As a result, companies often look elsewhere. Another hindrance to the growth of the local high-tech economy in Madison, according to the panel, is the ability to travel easily and efficiently by air. The lack of satisfactory connections and direct flights was lamented as a burgeoning problem since more local companies are working on a global scale.

“[The lack of efficient travel] impacts our ability to go out and do business and bring people in. It directly affects money too, because VCs can only see one company at a time,” Stultz said.

In light of Rayovac’s recent relocation to Georgia, the question of whether the state’s tax structure was driving out businesses was a particularly timely issue.

Drawing upon their experiences in other regions of the country, most of the panelists felt Wisconsin could do better, but acknowledged the difficulty of direct state-to-state comparisons.

“Drawing businesses from an infrastructure perspective, other states are more aggressive in drawing businesses … and Wisconsin must step up to that,” said Paul Weiss, president of Gala Biotech. He added that companies in other states often experience more beneficial tax credits.

Stultz said that taxes, no matter where the company is located, affect businesses based on their size, growth and industry.

“Taxing a company going through a high-growth mode is not a premium consideration, it applies to larger companies with a smaller gross margins working on the bottom line in a different manner,” he said.

Madison’s reputation as a great city to live in was acknowledged as a major draw for many individuals; however this is almost never enough to satisfy recruits and venture capital, according to the panel.

“Entrepreneurs need to create great places to work,” Stultz said. “You don’t need to sell Madison as great place to live. High-tech people worry about job opportunities. If there’s only one or two job opportunities, that’s how they perceive risk What happens if they need another job?”

Organic growth, rather than recruiting companies, was stressed as the superior method of developing a healthy high-tech community. Matthew Peterson, president of MyWeather, cautioned against the “myth of getting the big companies.” He warned that companies shut down remote plants when money is tight. He suggested that any recruited company should view Madison as potential headquarters, not a plant to be cut later.

Despite numerous criticisms, the panel’s tone was positive, suggesting that no hurdle is insurmountable.

“Madison is alive, safe, affluent, energized… from a tech point of view, there is ambition here and smartness. This place has some uniqueness, it’s ready to pop from our perspective,” said Gigot.

After the event, conversations turned toward what Madison needs to develop a successful high-tech economy based on attendees’ personal experience.

“I do think there’s a lot going on here; the argument can be made that we’re on the right track,” said Allen Dines, assistant director of corporate relations for University of Wisconsin, in reference to Madison’s high-tech culture. However, he acknowledged the problems Madison faces. “We don’t have any cashed-out entrepreneurs like Gary Gigot who started their own venture capital company after they cashed out … they’re not tired and they want to do it again and we don’t have that.”

“The points were right on. Until you have a wildly successful story … you’re always going to have a second-tier environment. [Madison needs] organic growth and a large, successful story,” said Rimas Buinevicius, chief executive officer of Sonic Foundry, a Madison-based company.

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Kristin V. Johnson is a Madison-based writer. She can be reached at kristin@wistechnology.com.