The Rise of Silicon Harbor

Tiny red lights blink in a curious but steady rhythm; a quiet, consistent hum purrs or whirs, maybe both. These tall banks of computers sit still and sturdy, concentrating as they chew bytes and rapidly sift, aggregate, arrange, and store digitized material. This narrow room overlooking Charleston's waterfront and the Concord Street Pier is operating at full-throttle, and just like the shipyard below, it's busy importing and exporting, loading and unloading, only the cargo isn't big containers. It's books: old, archaic books; shiny new books; new books made from old books; books downloadable via a free app; books ready to be printed on demand, if printed at all. Welcome to the engine room, if you will, for BiblioLabs---one of the innovative ships docked in Charleston's increasingly busy and newly dubbed "Silicon Harbor."

**Start-up Savvy ** BiblioLabs is one of three local tech enterprises, all within a three-mile radius of each other, to have been named an Inc. "500 Fastest Growing Companies" in the last year. And by fast, we're talking 1,111 percent growth over the last three years, ranking BiblioLabs at No. 7 on Inc.'s media company list, just behind a little firm you may have heard of called Facebook at No. 6. Not bad for a start-up that began with four people working out of a small downtown apartment in 2006. Since then, it has evolved into a company of 26, including 13 software engineers, with a revenue of $17.5 million in 2011---and that's before they even rolled out their first product, BiblioBoard, which debuted in August.

As a hybrid software-media company, BiblioLabs uses technology to enable curators, librarians, and curious folks to easily cull through and make accessible the overwhelming amount of extra-ordinary online public domain material (archaic books, manuscripts, and the 60,000 volumes of the British Library's 19th-century collection, for starters). With BiblioBoard you can peruse new anthologies created from rare, dusty, or here-to-fore scattered materials, everything from historical collections such as Japanese Fairy Tales and American Slave Narratives to The Punk and Indie Rock Compendium. Their free platform, Nuvique, lets you create a custom multimedia anthology about whatever tickles your fancy. Basically, BiblioLabs takes Old World technology, i.e. the printing press (ironically, the technology that launched the modern era) and retools it for the 21st century. Which, in essence, mirrors the way this burgeoning cluster of local tech companies is helping reshape, retool, and upfit the Charleston region for the new knowledge-based frontier.

As Thomas Friedman made clear, the 21st-century world is flat, thanks to the converging waves and rising tides of globalization and technology, and in this newly pancaked world, Friedman argues, it is agile, adaptable entrepreneurs who will prevail. As old port towns like Charleston know all too well, converging waves and rising tides impact a harbor. Undoubtedly, hulking, fuel-guzzling container ships will continue to have a presence, but sleek, clean, and nimble USB ports are moving in as Charleston gains national attention, as it did last year in a Fast Company article, as an emerging tech hub. According to Fast Company, our Silicon Harbor is on its way to becoming the East Coast counterpart to California's Silicon Valley.

"Charleston is coming of age at just the right time---about 20 years into the digital era," says BiblioLabs founder and CFO Mitchell Davis. "What we're seeing now is that these earlier, big established companies, such as Hewlett-Packard, are like a really large boat going in one direction, and it can be very hard to turn the ship. But the Charleston tech scene is maturing just as this second flowering of technology is happening---cloud computing is lowering the risk threshold, and there are new, more nimble platforms. We're not bogged down by outdated processes."

**Incubation, Education **This "coming of age" however, has been a long time coming. Somewhere around the turn of the century (remember Y2K?), local business and economic development leaders recognized the need for further diversification, especially the need to attract, promote, and nurture high-wage jobs in a sustainable knowledge-based economy. In February 2001, the City of Charleston created the Charleston Digital Corridor (CDC) to do just that, and tapped Ernest Andrade, an unflappable, forward-thinking go-getter, to lead the way.

"I just assembled a smart group of people and asked what they needed, what they wanted to do," says Andrade, who launched the Corridor with 18 qualified (i.e. knowledge-based) software-related companies and now has 94 member companies, including Google, Benefitfocus, Blackbaud, Blue Acorn, TwitPic, and the aptly named BoomTown. "All our members serve as consultants to the CDC. They are the ones directly involved in the industry; they know better than anyone what value-added services are needed to support them. What makes us effective is that we are nimble enough to take this intelligence and act on it immediately," Andrade says.

As a public/private partnership with a modest annual budget, the CDC is fully in sync with its audience. "We are a market-oriented program operating with a start-up mind-set ourselves," Andrade adds. "By launching innovative programming to serve our companies, we embrace the same level of risk as the companies we try to nurture and attract. One hundred percent of our programs are designed with the entrepreneur in mind."

Early on it was clear that Charleston's tight real estate market made access to centrally located, flexible, and affordable workspace a challenge for knowledge-based start-ups. To meet the need, the CDC launched their signature Flagship incubator program. In 2009, the first Flagship facility opened on East Bay Street, offering 5,200 square feet of office, conference, and co-working space for urban professionals. In less than a year, the Flagship's 12 offices were fully leased, it had graduated seven companies, and it had created 65 jobs, infusing nearly $5 million into the local economy. In 2011, the CDC shipshaped the former Luden's marine supply store into Flagship Two (FS2), adding an additional 13,700 square feet catering to slightly larger or growing companies. Both facilities offer full-service, furnished offices, complete with requisite uber-hip design, Starbucks proximity, and indoor bicycle parking (and a Flagship loaner fleet), along with flexible monthly leases. To date, 54 firms have graduated from the Flagship incubator program, including O-Matic Software, PeopleMatter, and Jack Russell Software. "We provide the tools to help them succeed, then we want them to either succeed quickly or fail quickly," explains Andrade. Thus far, their incubator record is an impressive 54 and three.

Other CDC programs range from networking/social events such as Fridays @ the Corridor, the annual Corridor BASH, and the iFive:K Run to offering start-ups assistance through capital and financial incentives and helping with site acquisition and access to talent. That last bit is key. When you talk to Andrade, Mitchell Davis, or any other knowledge-based employer around town, they'll tell you their biggest challenge is finding qualified talent. There are some 2.5 million unfilled software jobs in the U.S., reports Davis, and despite the fact that the Charleston metro area had the greatest increase in the country for number of residents with bachelor's degrees over the last decade, we do not have a surplus of highly educated, highly skilled, tech-savvy job hunters to fill these high-wage positions. Nowhere near it. In 2011, the Charleston region saw 143 percent job growth in computer-related jobs; more than 84 percent of CDC companies made hires, offering average wages that were almost twice the state average ($68,945 compared to $37,920). As this article goes to press, at least 73 percent of the 94 Corridor companies are hiring.

The CDC's Talent Portal, a local tech job board, and CharlestonWORKS, a more proactive outreach and talent management initiative, are some of the targeted efforts to attract, develop, and retain a highly skilled workforce. To augment workers' marketability and skills, they offer CODEcamp, a four-session series that helps improve fluency in various geek-speak languages (Ruby on Rails, JQuery, Node.JS, Clojure, etc.) and sponsor various software users groups. But in order to significantly strengthen and expand the local tech talent pool, according to numerous industry leaders, the College of Charleston's computer science department needs to step up its game.

"We already partner with [professor] Chris Starr and his colleagues, and they do an excellent job with what they have," says Andrade, but the college administration needs to invest in growing their program and graduating more computer science students, he and others like Mitchell Davis believe. To that end, four years ago Davis, a 1993 College of Charleston graduate, and his BiblioLabs colleagues endowed four full-ride CofC scholarships, including paid Biblio-Labs internships, for incoming computer science students. But that's just a drop in the bucket compared to what is needed. "The college currently graduates around 25 to 35 computer science students a year, and we could hire 200 a year in the local economy alone," says Nate DaPore, CEO of the Charleston-based human resources software company PeopleMatter. "Chris [Starr] works with zip ties, bungee cords, and duct tape; he needs more resources. We're hopeful that a capital campaign is forthcoming and are eager to help with that."

**People Matter; Place Matters, Too **DaPore knows something about talent pools and staffing issues, both in terms of the software platform his company created to manage hourly service industry workers, and in terms of People-Matter's own urgent need to hire qualified IT professionals. To get a sense of the remarkable growth trajectory of Charleston's knowledge-based economy, look no further than DaPore's company, one of the successful graduates of Flagship, which it grew out of in 2009 after just two incubation months. PeopleMatter began with three staffers, doubled in size, and fledged Flagship with a crew of six. Now the company employs some 150 team members, with plans to move into their swanky new King Street headquarters in March. "We hit that milestone where I no longer know everyone's name," says DaPore. "That's a long way from three people in a broom closet."

DaPore's strategic decision to locate their new 14,000-square-foot world headquarters on upper King Street not only means new life for a long-abandoned building, it sends a message to the Charleston area: Tech is here as a major player, and the knowledge-based industry fits right in with Charleston's historic and cultural urban fabric. "We could have moved to a campus on Daniel Island and joined the little hub of tech activity already there, but I love the city," says DaPore, who grew up downtown on Bull Street. "We want our team members to have easy access to fabulous restaurants, incredible shopping, and the vibrancy of Charleston. I believe that sort of intellectually and culturally stimulating environment will help us kick ass in the marketplace. So we're completely gutting a 19th-century building and rehabbing it for a 21st-century business."

A quick spin around PeopleMatter's interim offices on the old Navy Base tells you that you're not in Kansas anymore, or at least you are not on Broad Street or in the buttoned-up, traditional corporate world. A gaudy plastic throne, like something from Pee-wee's Playhouse, sits by the front desk. University banners hang from the rafters in a colorful display of alma-mater pride, and in the corner, there are Foosball tables, a wide-screen TV, and electronic games. The average team member age appears to be 30-something, and they all manage to comply with PeopleMatter's "no jacket and tie" dress policy. Dogs are welcome. A small printout taped to the conference room door channels Will Ferrell in Saturday Night Live, calling for "More Cowbell."

"Who says HR has to be boring?" the company's website asks. Sounds like things certainly aren't boring when the PeopleMatter crew takes on the BoomTown team each year in their heated tech start-up Field Day rivalry, complete with egg toss and izzy dizzy races. For the record: BoomTown, a real-estate software enterprise that also made the Inc. "500 Fastest Growing Companies" list (at a highest-in-SC 3,085 percent increase), took home the Field Day trophy last year, "but I kicked Grier's [Grier Allen] ass in the CEO obstacle course," DaPore beams.

**More Cowbell **However, it's not all a field day for those trying to grow Charleston's knowledge economy, and the obstacles that entrepreneurs like DaPore, Allen, and Davis face include more than a slim workforce and office-space crunch. Growing at a 1,000- to 3,000-percent rate typically requires a hefty infusion of capital, and most of the tech industry venture capital (VC) players are still bedded down in the Silicon Valley, not our harbor. The need for better access to capital, for more cowbell if you will, is a recurring theme in talking with local tech industry insiders. But, says Andrade, "That's not a challenge limited to Charleston. Any place faces the challenge of capital investment, especially given the diminishment of resources in the broader economic climate."

According to the most recent Charleston Regional Development Alliance (CRDA) scorecard, our region is backpedaling in the VC arena, especially when benchmarked against our competitor cities such as Raleigh, North Carolina, and Austin, Texas. Raleigh attracts VC investment at a rate of $547 per job, Austin at $519 per job, and Charleston at only $36 per job, the CRDA reports. "Venture capital investment, critical to the region's innovation growth, did not exist here in 2005," the scorecard notes. That changed in 2007 when Mount Pleasant's Automated Trading Desk, a pioneer in the automated stock trading industry, landed a $60-million infusion from Technology Crossover Ventures, a leading Palo Alto VC firm. More recently, PeopleMatter garnered a $14 million nod from Morgenthaler Ventures, one of the West Coast's premier VC companies.

These significant votes of confidence are proof, Andrade affirms, "that there is no shortage of capital for investing in great ideas that can be executed." He bristles a bit at the comparison to Raleigh and Austin, cities that have been actively developing their knowledge-based economy for decades before Charleston entered the fray, but that doesn't mean he is content with the local status quo in terms of access to capital for CDC member companies, either. Plans are currently underway for the CDC to hatch its own knowledge-based economy capital investment fund in the near future.

"The software industry is a lifestyle industry. These are companies that can choose to be anywhere, so what matters is quality of life and vitality of place and that's the DNA that Charleston has going for us," says Andrade. "Charleston is undoubtedly a top city for the IT industry," he asserts. "Issues with needing more talent and capital are good problems to have. We are up to those challenges, and we will meet them."

The Knowledge Economy; Know the Numbers

Charleston's emerging profile as "Silicon Harbor" isn't just local news, we're landing on the national radar according to stats provided by Charleston Regional Development Alliance. Here's a quick look at this harbor's rising tide:

• Top 10 fastest-growing software development region in U.S.

• Top 10 fastest-growing mid-size metro for computer hardware engineers (#1), computer research scientists (#2), statisticians (#3), computer operators (#3), graphic designers (#5), computer programmers (#8), and electrical engineers (#10)

• Fourth highest per capita concentration in U.S. for computer research scientists

• Seventh highest for computer hardware engineers

Source: Avalanche Consulting Headlight Data System (data measured out of 125 mid-sized metros, 2006-2009)