Ring Of Hire
Emergence Of High-tech Firms Nets Jobs -- And Prestige -- For MadisonWisconsin State Journal :: BUSINESS :: B1

Sunday, October 15, 2006
JUDY NEWMAN jdnewman@madison.com 608-252-6156

They make cutting-edge products, from the hottest video games to potentially life-saving drugs and cancer treatment machines. They are the Madison area's technology businesses. Tech hot spots have formed a virtual ring of innovation around Madison, as well as a pocket Downtown.

"I don't think there's any question that in a 10-year period things have dramatically changed," said David J. Ward, president of NorthStar Economics in Madison. "I wouldn't say everything is perfect, but the pieces are there."

Twenty years ago, technology companies often served as lonely outposts around the outskirts of the Madison area: biotech leader Promega Corp., a sole sentry on the Fitchburg plains near Fish Hatchery Road; drug research company Covance, quietly tucked into the Northeast Side near the Dane County Regional Airport; Ohmeda -- now GE Healthcare Life Support Solutions -- on the Southeast Side along Interstate 90; Agracetus -- now part of Monsanto Co. -- experimenting with genetically engineered plants along Middleton's edge; ABS Global, a bull-semen company near DeForest.

Now, there are dozens of success stories, from cancer radiation equipment manufacturer TomoTherapy, which has gone from zero employees to 420 in the past 10 years, to medical records software developer Epic Systems, building a cluster of its own in Verona to house its 2,000-plus employees.Setting an example meanwhile, as the early tech companies have grown and expanded, they have served as magnets, drawing other tech companies as neighbors, forming bigger and more technology clusters, or hot spots around the Madison area.

They are at University Research Park and the Old Sauk Trails Business Park. They're also in Fitchburg, Middleton and Verona, near the airport and Downtown. And that's helped the tech industry gain substance.

"The cluster idea is vital," said Jim Leonhart, executive director of the Wisconsin Biotechnology and Medical Device Association in Madison. "Because of opportunities for companies to share their research, proximity is important. Employees know that if something would happen with their job, there are others they can move to. That's a relatively new idea (for this area)."

Being near other tech businesses is a big advantage for companies like Renovar, a startup developing drugs to improve organ transplants, housed in the MGE Innovation Center at University Research Park.

In addition to sharing a conference room and other amenities, "when you come to work, you see other people that are being entrepreneurs and working on some meaningful commercialization of science. ... And you don't think, 'I'm crazy to do this,'" said Peggy Hedberg, Renovar's chief executive.

Imago Scientific Instruments recently moved to the New Venture Center at the Fitchburg Technology Campus, not for the camaraderie but largely for the appearance. "We have a global customer base -- most of our customers come in from Japan, Europe and Taiwan," said chief executive officer and President Timothy Stultz, who moved here from California's Silicon Valley.

Stultz didn't want a building with a front lobby full of showy mahogany, but one with open, well-lit laboratories and manufacturing space. "These buildings had a high-tech look and feel. ... It reflects well on the company," he said.

Raven Software wasn't really looking for a tech cluster when the video game development company chose to move its 130 employees to Greenway Center in Middleton, said studio head and co-founder Brian Raffel. "The only thing the cluster brings is businesses that support those clusters -- nice restaurants ... and Greenway Station shopping," he said.

Area gains 'critical mass' Mark Bugher, director of University Research Park and chairman of the Madison Economic Development Commission, said he thinks the Madison area is finally developing a "critical mass" of science and technology companies. "It's the manifestation of years of work developing the infrastructure and the climate for a hospitable science and technology industry here in the greater Madison area," he said.

That infrastructure is not so much bridges and roads as it is buildings, services, funding and money, economist Ward said. The tide turned about a decade ago, he said, when UW-Madison officials made it a priority to turn campus research discoveries into marketable products, with the help of the Wisconsin Alumni Research Foundation.

Campus construction projects have included biochemistry labs and engineering space, Ward said. Attorneys and accountants have gained experience defending patents and budgeting startup costs. Wealthy investors have formed angel investment groups and startups have aggressively pursued federal grants.
It's a trend that's gained attention around the country.Getting high marks
The Madison area "is doing quite well," said Perry Wong, senior managing economist with the Milken Institute, an economics think tank in Santa Monica, Calif. "I think Wisconsin has a long tradition, especially in the Madison area, of building industry," Wong said. "I've noticed that Madison has grown steadily over time, from the heydays of the dot.com era through today's life science craze. The region has done very well." And that isn't necessarily easy. Competition for technology jobs has only grown more intense, Wong said.

A look at salaries shows why: In 1995, the average Wisconsin worker was paid $25,089 a year while the average high-tech employee made $36,113, according to the Wisconsin Department of Workforce Development. In 2005, average annual pay statewide was $35,503; the average tech industry employee received $53,417.

But there's still a ways to go, Ward said.

For one thing, there's not enough money being invested; it's being dished out in too-small increments, he said. And it will take a change in attitude. Wisconsinites worry too much about taking risks, Ward added. "The thing lacking in Wisconsin that really is in Minnesota -- where the per-capita income is $4,000 a year higher -- is a culture of creating (companies) out of existing (companies)," Ward said. "As soon as you establish that, you've got yourself a winner."