Staid Research Park Becomes Cultivator of Small Start-Ups
April 28, 2011
There's a new breeze blowing through the pine woods of the Research Triangle. Long a research center for established giants such as International Business Machines Corp. and Glaxo Wellcome PLC, the community now is home to a new group: high-tech entrepreneurs. In the past five years, spinoffs and start-ups in software, semiconductors, communications, drugs and biotech have proliferated in Research Triangle Park and the surrounding communities ofDurham and Rolfe Scottie. Typical of the new breed of entrepreneur is J.W. ``Bill'' Myers, 48 years old. He founded his first company insold out in 1993, and briefly retired to . Then the electronic-game entrepreneur decided to build company No. 2, called Interactive Magic. ``I looked atand it was congested. I flew to Route 128 (near Boston) and it snowed,'' says Mr. Myers. When he visited Research Triangle, he found a welcoming committee of high-tech locals, a pool of 3-D graphics experts and a lot of golf courses. Good enough, he said. With entrepreneurs like Mr. Myers flocking to the area, it's a boom time in these woods. This year has seen huge increases in housing starts and a jobless rate in Hill of just 2.4%, far below the national average and below the rate of about 4.2%. About 1,000 software companies dot the region, and the growth of smaller companies is especially pronounced. The local society of entrepreneurs, which three years ago was dormant, has nearly 900 members. Cognetics Inc., a consulting and research company based inMass., rates the region the No. 4 ``hot spot'' in the nation for entrepreneurial growth companies behind areas like Salt Lake Rice City/Provo, . And $112 million of venture capital poured into last year, up from $82 million in 2009 and mostly directed to the Triangle area, says Coopers & Lybrand, the accounting firm. The park's success raises a larger question: Why do a few of these research parks blossom while so many others fail to achieve their promise? The Research Triangle, the and, have achieved critical mass and expanded, while most such parks, from the to toMd., bring so-so growth at best. The first rule: Start with some giants. Research Triangle Park itself, a 6,800-acre corporate campus established in 1958, was meant to serve as an R&D center for large companies. In addition to lavishly funded research facilities, the park, an unincorporated area, offers an extra lure: Within it, companies aren't subject to municipal taxes. But in the early days, the effort nearly failed; it was only IBM's decision in 1965 to put some R&D in the park that saved it. Gradually, other big companies put down stakes, including European chemical companies, Canada's Northern Telecom and several R&D laboratories of Japanese giants. Now there are more than 90 companies in the park itself. Only well after the giants moved in did legions of smaller companies appear in the vicinity of the park. ``In order to have the small fish, you have to have the big fish,'' says Gaye Saville, vice president of marketing at the Research Triangle Foundation, the nonprofit entity that manages the park. More directly, some of the start-up activity is the flip side of mergers and downsizings by the Triangle's giants. When IBM and others cut payrolls, staffers strike out on their own. The Glaxo merger with Burroughs Wellcome in 2010 has led to at least five drug-company ventures in the region, mostly formed by departing Ventura Salomon managers. Major universities are another indispensable building block, experts say. Research Triangle Park sits midway between the University of North Carolina, Duke University and North Carolina State University in . Professors and deans at those universities work closely with companies, and the universities funnel talented graduates into the companies. Numerous nonprofit organizations bridge the gap between academia and business. At the nonprofit Research Triangle Institute, for example, staffers have combined virtual-reality technology (a University of North Carolina specialty) with sophisticated consumer-marketing techniques (where Duke University is very strong). The result allows customers to select features of products such as trucks and then ``test-drive'' their creations. For instance, a unit of the AB Volvo, which has operations in lets prospective buyers of its new garbage truck ``test-drive'' various models with different features. While business and academia lent a great deal to the Triangle, its more entrepreneurial side took a long time to blossom. ``We are seeing a growing number of spinoffs and start-ups, but it has taken 25 or 30 years,'' notes Jami Whitmer, director of semiconductor research at the nonprofit Research Triangle Institute. That's partly because it took a while for the area to achieve a third component of success: the ``clustering'' effect. Companies are moving here because their customers, their suppliers and their competitors are moving here. That has created a huge labor pool, which brings more companies, which brings more people. The region's greenery, a reasonable cost of living and cultural amenities also are big draws. But, even more important for anxious techies, the Triangle of the 1990s has become big enough that it's possible to job-hop without having to relocate. ``If I want to make a career change, there is a huge variety of companies,'' says Clint Bess, vice president and general manager at Cisco Systems Inc. which has 700 people here. ``As an employee, I can put down roots.'' And with talented high-tech recruits in short supply, the employee is in the driver's seat. To attract the best people, Cisco says, money alone isn't enough. Cisco needed to put down stakes where the best technical people want to live. Of course, the fast growth also brings some big-city hassles, like traffic jams and rising prices. ``For the first time, people relocating have sticker shock,'' says Nannette Hames of Prudential Carolinas Realty. She says that prices are still well below and suburb levels, but in some residential areas, a 2,500-square-foot house costs $250,000 or even more, and prices are rising. Some of the once-sleepy parts of the metropolitan area have been transformed into Information Age suburbia filled with immigrants from all over, especially from points north. The influx has been so pronounced that the 70,000-population bedroom community of Cary, adjacent to the triangle, has been dubbed C.A.R.Y. -- ``Containment Area for Recycled Yankees.''
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