Why is it so hard to keep great people in Southwest Virginia?

I believe there is somewhat of a looming crisis in Southwest Virginia and I’d like to bring my thoughts to the attention of the surrounding community. I figured my blog would be the best way to get started.

I decided to write this piece after reading a press release today off of the Virginia Newswire that I get on a weekly basis. The press release is titled: “Roanoke Information Technology Firms Join Forces to Fulfill Wider Range of Clients’ Needs” and is mostly a feel good piece about how SoftSolutions, Inc. and The Merge Group have recently partnered in order to “augment each other’s staff on an as-needed basis.” First of all, I think this is great “out of the box” thinking and I like to see that happening down here. However, it’s the reason for the partnership that concerns me and it is one of the same problems that I’m facing here at Webmail.us. According to the release:

“Both firms have a similar challenge in recruiting top-notch Information Technology pros. The increase in corporate hiring that started in 2004, coupled with IT pros leaving the Southwest and Central Virginia regions to take Federal contracts in the Washington, D.C. metro area has made it difficult to meet the staffing needs of the two firms.”

According to Ed Gooding, the President of Merge:

“There have been so many solid IT pros looking for work that it has been easy to find qualified employees. We noticed last year that the well started to dry up on us…”

Now don’t get me wrong, I realize that this was just a press release and more than anything, the two firms were trying to bring a positive message to the table. And again, I commend them for their efforts. In fact, we did something similar with Vision Point Systems, a company here in the Corporate Research Center. We are now outsourcing a couple of key development projects to them until we can find the right people to bring on board full time – at which time we’ll probably need to bring even more people on board and will thus continue our relationship with VPS.

I believe that we need to start to dig into the root of the problem in this region. As a community, we need to work together to formulate a strategy for how we’re going to position Blacksburg and the rest of Southwest Virginia as a breeding ground for growing businesses. There are some efforts down here to make that happen, but I really am concerned that the area is not prepared for success. I think we’re a great case in point: we are currently seeking to hire a number of different types of professionals, mostly with technical skill sets. However, finding good, qualified candidates has been an insurmountable challenge… and that is with Virginia Tech and Radford University right next door, graduating hundreds of qualified folks every year. I now believe that this is one of the major risk factors facing our business. I’ve talked before about how important it is to find the right people. The bottom line is that if we can’t find the right people to put on our bus, we’re not going to be able to drive as far as we want.

So… what are the real problems? Here are some of my thoughts:

1. There are no real sources of funding for growing technology firms in this region

I now have a decent amount of experience in this area. I’ve spent the last 12 months pursuing a small round of financing and although we’ve been successful and are getting close to our goal, we’ve raised all of our money from private investors and high net worth individuals. There are not that many VC firms down here and most of the few that are here wouldn’t even consider us as an investment opportunity. The Virginia Center for Innovative Technology gave us a look for their GAP program, but they deemed us not to be “venture fundable” so they turned us down as well. To my knowledge, they have yet to provide any funding to a company down this way. But the bottom line here is that if the funding sources aren’t available, entrepreneurs are going to go elsewhere and bring the opportunities with them. The fewer opportunities there are in the region, the fewer jobs are going to be created which keeps people looking elsewhere for great jobs.

2. There is yet to be a truly great success story in this region

By truly great success story, I mean major, positive liquidity event where local investors profited from an investment in technology. This is at least the common theme I have heard from the investment community. Without the success stories, the local investors either have all of their cash tied up or lost too much of it already. And without the great stories and faith from the local investment groups, it makes it even tougher to attract capital from the outside world. And finally, without any big-time technology companies down this way, I believe most potential employees don’t really realize the businesses that actually are here. Bottom line: we need some great companies down here to help shine a light on the others that are working towards greatness, but need great people to help them get there.

3. There is a bit of a public relations problem down here

When I graduated from Virginia Tech, running a business as an aspiring entrepreneur, the first thing I did was move our company to Northern Virginia. It seemed like a natural decision and to be honest, I didn’t really know much about the Corporate Research Center to begin with. Nobody reached out and nobody tried to talk us into staying. Nobody down here really cared that we existed. I have to think that most graduating students, especially ones that are not CEOs of technology companies, have no clue what the Corporate Research Center is all about or that there are more than 120 companies currently working out of these facilities. If they don’t know we’re here, of course they’re going to leave!

So… those are some of the problems as I see them, but what can we do to solve them? I wish I had the answer, but all I have are some ideas.

1. First of all, I think the Corporate Research Center needs to work closer with Virginia Tech and Radford University. I’m hoping this will start to happen once the Virginia Tech Knowledge Works incubator facility opens up. This should happen in the next couple of months – the building is right next to ours, so I can see progress being made every day. Once that happens, hopefully they’ll be able to hatch a good company or two and that will also help to shed some light on the park.

2. I believe the local investment community is going to have to be a little more open with the entrepreneurs, CEOs, and business owners. Again, there aren’t that many funding sources down here, but companies like Third Security and Gryphon Capital are going to have to open up a dialogue with entrepreneurs in the community. I have no interest in taking money from either one of those firms, but it seems rather odd to me that I haven’t even met the Third Security people. Gryphon Capital did reach out to me and although we only met a couple of times, I learned a lot from them and I’m confident that they feel the same way. Third Security sends a nice form letter to guys like me.

3. The Virginia Tech Foundation should help to make #1 and #2 happen. I’m sure they have a ton of money wrapped up in the Knowledge Works project and I know they have a ton invested in the Third Security fund. I think they need to do a better job of understanding where that Third Security money goes. I know that if I’m going to be a donor one day, I will want to have an idea of where my money will go… or at least what types of companies it will be invested in, even if it’s being managed by a VC fund.

4. I’d like to see the Corporate Research Center develop into more a community. Right now, I just don’t see much interaction between different companies in the park, either on a social or business level. I’m not sure how to solve this problem, but I know there are ways.

There are some positive things I have seen over the last few months…

1. I have brought several small ideas to the Corporate Research Center and they do listen. I actually wouldn’t spend my time writing this blog if I didn’t think people around here were going to listen.

2. The NewVA Corridor Technology Council put on their annual Capital Access Forum, which I felt was a very successful event.

3. The Virginia Tech Knowledge Works program seems to be coming along. I look forward to seeing that program launch.

4. The Virginia Tech Foundation inherited some stock in our company. Hopefully that will motivate them to listen to some of our ideas more-so than if we were just another Corporate Research Center tenant who was paying lots of rent.

5. The Sigma Grill opened. The restaurant is run by some forward thinking guys and now serves as a common ground where people can eat and network… or at least see each other now and again. I’d like to see that place grow into more of a networking venue, but the fact that it’s open is a good start.

6. The Corporate Research Center worked feverishly to help me find a new office that meets our budget and allows us the opportunity for growth without having to move again. This was a good sign to me that they’re willing to do what it takes to facilitate our success.

More than anything, I believe the leaders in this region are going to need to come together and help to position Blacksburg and Southwest Virginia as the emerging technology corridor that it is. I am willing to help in any way I can and I will do my best especially to create one of the success stories I talked about above. But I’m willing to do even more than that - I’m willing to play my part in the community and do what it takes to get this area ready for success. I’d love to hear from anyone that shares my same interests and of course, the rest of you as well.

In the meantime, it’s back to the recruitment board. We just made some great hires and will continue to do what it takes to get the right people on our bus.

Thanks for reading this,

Pat

Comments

[Sean Pecor]

I'll preface my comments by stating that I'm a relatively successful internet developer and entrepreneur who only just recently moved to the region from Vermont. I don't yet have my finger on the heartbeat of this region, but I'm beginning to get a feel for this area and this is a discussion that interests me.

Here are some of my observations, in no particular order:

1. If the real estate market is any judge, there is a shortage of high net worth individuals living in the new river valley region. We're working towards closing on an estate in Catawba Valley, and during my research I expected to find many more properties in the $1M range and above range. Instead I found surprisingly few. By contrast, there is an ever increasing number of upper middle income folks who are paying an average of $235K lately for 3-4 bedroom homes in town. On one hand, you've got a much higher than average percentage of upper middle income families moving to Blacksburg and pressuring prices up on suitable homes. On the other hand, you have this seeming shortage of high net worth individuals. To me that screams New Economy. My father in-law went to VPI in the early sixties, and by his account this town was a college dropped dead in the middle of nothing but farmland. We either have to be patient and wait several decades for our economy to create it's own population of high net worth individuals, or we must recruit them. Virginia Tech seems to be doing so indirectly with the Knowledge Works program. I think that a sensible next step is to recruit Alumnae interested in creating a new v.c. fund that can speed the economic growth that will help ensure that students have access to the entry-level internships (and long term positions) that will better prepare them for the nation's new economy. If the school can put up a $3.4M horse barn, it can create a $5M venture fund for new technology.

2. Many may disagree with me, but I believe we need to focus on the challenges that face the Blacksburg, Radford and Christiansburg (BRC) metro area first. If the discussion is about Southwest Virginia, I think the volume of challenges grows longer, while the volume of solutions grows very short. My financial advisor, who is based in Roanoke, told me that his fastest growing market is Blacksburg by a substantial, substantial margin. All the while his Roanoke account growth is slowing. According to the 2000 census, the mean retirement income of residents in Blacksburg is nearly twice that of Roanoke residents. In Blacksburg, over 52% of workers are working in a managerial or professional capacity, compared to only 26% in Roanoke. These are two areas with distinctly different economic problems to solve.

3. We need to focus on the short term in recruiting individuals who are drawn to the lifestyle and beauty that the area can offer today. Headhunt college students who grew up in the mountains and foothills and are drawn to them. I've interacted with many students and I find that a goodly many of them are from northern Virginia, or other places quite unlike this region both topographically and culturally. Some are drawn back to this area, yes, but many are simply adapted to a different culture. We should look to Virginia Tech and Radford first, but more specifically locate the students whose activities and background are mountain-centric. Next, we headhunt in top engineering colleges across the nation. Pick out M.I.T. programmers that were raised in Blacksburg. Stanford engineers that were raised in Radford, and so on. If we try to take the ingredients we have today and cook up a metro area that tastes like Silicon Valley, or like Cambridge, or like Norfolk, the result is going to taste bad and smell worse.

Sean.

[Idetrorce]

very interesting, but I don't agree with you
Idetrorce