Editor’s note: On the heels of President Trump’s State of the Union address, HQ Raleigh asked Tom Snyder, executive director of RIoT – the Internet of Things users group that’s growing like flowers in the Spring sun – to address the “State of the Region” in North Carolina.
Those who know Tom are well aware he is a creative soul. And in sticking to the State of Region theme, he discussed domestic and foreign affairs, progress, opportunities, threats and defense and offered a call to action. Any economy has all these ingredients. Economies that maximize potential have all these working with energy and in cooperation. So how does North Carolina stack up?
Domestic Affairs
Looking inwardly, there are a number of positive trends. In the startup world, as in business at large, companies need resources, talent and customers.
Less than a decade ago, there was a single co-working space in the Triangle, First Flight Venture Center. Now there are many. American Underground (Durham) and HQ Community (Raleigh, Greensboro) collectively house nearly 500 startups. Opportunity has exploded in the Triangle with Loading Dock, Frontier, the Nest, the Pinkubator, BioLabs and several more. Importantly, there are resources for entrepreneurs across the state from Wilmington (Tek Mountain) to Asheville (Hatch, Base Camp) and Charlotte (Packard Place, Launch Factory) to name a few.
National chains such as WeWork have made announcements for significant growth in this area. What is encouraging is that smaller communities are stepping up efforts to build their own creative communities. Wake Forest has a dedicated task force chartered to develop a strategy to support startups. Wilson has made significant investment in broadband and other vital tools.
The UNC system has been a backbone of the economy for decades. But important, and positive shifts are emerging that directly support entrepreneurship. The Entrepreneurship Clinic at NC State achieved national recognition as the Outstanding Emerging Entrepreneurship Program in the US in only 3 years. The NC State Office of Technology Commercialization just announced a partnership with RIoT to expand support for startups. Even more encouraging, Duke, UNC and NC State have broken down silos, creating the Triangle Venture Alliance investment network among their alumni.
Universities across the state are engaging more directly into their entrepreneurial off-campus communities, forging new relationships with shared mission and complimentary resources. A result is graduates with a stronger balance of technical and business savvy and the confidence to explore “creating a job” instead of “finding a job” upon graduation.
The same blending of education directly into business growth is strong at the community college level. Last year, the Wake Tech Small Business Center held 127 seminars and workshops resulting in 195 new small business jobs.
Crowd at HQ Raleigh gathers for Tom Snyder “address”
It may not be widely known, but when Iron Yard code school recently shut down, it was not due to performance of their highly successful local chapters. It’s exciting to see another source of talent growth with the launch of Momentum Learning at American Underground from the same proven Iron Yard team.
Formal education is an important pipeline for talent development. Equally important is experienced mentors who can teach the next generation of entrepreneurs. The region is maturing in growth from first to second generation startups.
Leading by example in Raleigh, Cindy Whitehead is reinvesting significantly both experience and capital from her $1B Sprout Pharmaceuticals exit at the Pinkubator. Recent sales of Source3 to Facebook and Wedpics to Mixbook have resulted in Tom Simon and Justin Miller re-investing into their new startup, Zookie’s Cookies. Scott Moody’s K4 Connect is growing much more quickly than his first startup Authentec, which sold to Apple for $365M. Local re-investment of knowledge and capital is what enabled Silicon Valley to reach where they are today. North Carolina is moving positively in that direction.
Competition
It is important to not only measure internally, but also think about how this region compares to others. What threats exist? What are opportunities to scale and sell solutions to other places rather than buy them from the outside?
North Carolina has a huge advantage over many regions due to the balance of industry present. The economy is not dominated by energy or medicine or software. Rather, there is a balanced strong presence in all these plus agriculture, manufacturing, pharmaceuticals and transportation.
The Internet of Things is clearly the next wave of the economy, but what is significant is that IoT technologies apply horizontally across every market vertical. The next great companies will be born out of sensors and data. Data science, machine learning, artificial intelligence and blockchain are key focus areas. The Triangle houses 2 of the three largest IoT data organizations in the world with IBM and SAS. This is a huge advantage. Companies can leverage these tools while being close to customers across multiple market segments. This puts startups here at a growth advantage compared to other areas.
The RIoT network itself is a huge asset to the region. In less than 4 years it has grown to 6,000 members and more than 60 companies working collaboratively to grow the IoT economy. A leading success indicator is the number of companies reaching out from across the US and around the world to join the RIoT consortium. North Carolina is establishing itself as the best place for IoT business in the US.
Growth & Opportunity
Positive examples exist of the area attracting and acquiring new business growth from the outside. Important companies like Docker have chosen NC for their East Coast operations. Keep an eye on BruVue, who moved their headquarters from Ohio to Raleigh to disrupt the beer supply chain through IoT. This month they announced a partnership with Heineken.
Last week Red Hat acquired CoreOS for $250M. This represents another key measure to watch. Local exits to outside groups are significant, but the region becomes even more significant on the global stage as home-grown companies acquire those abroad.
Some regions are ahead of NC in investing in themselves. Big tax incentives continue to make headlines, such as the recent $4.5B in public cost Wisconsin committed to get a single Foxconn factory. The current Amazon HQ2 bidding war is dominating social media. But some places, like Austin for example, are already putting hundreds of thousands of dollars per year directly into their own startup scene. Charlotte recently made a big positive step with the formation of the Charlotte Regional Fund for Entrepreneurship, which includes $500k from the city, matched with private and nonprofit funding to support startups. North Carolina needs more direct financial support at the local and state level to grow the next Foxconns and Amazons.
NC IDEA leads example. They regularly place early bets on North Carolina citizens’ abilities to grow great companies. The recent acquisition of Transloc by Ford Mobility is a great example. It is exciting to see concerted efforts by NC IDEA and others to increase support across the whole state and to support women and under-represented minority groups that are demographics not well enough supported in the past.
Charlotte has their first “unicorn” company as AvidXChange achieved a $1B valuation. Recently PrecisionHawk raised an additional $75M with stated ambition to achieve a $1B exit in Raleigh. Over the past 4 years, RIoT worked with companies in the IoT space that collectively raised over $275M and created hundreds of jobs. Outside capital is beginning to flow more readily into the region, which is healthy.
Smart Cities
There are extremely forward-thinking efforts in all the local municipalities to set our region apart. Innovate Durham provides open data and government staff support to startups working civic projects. Cary has been recognized nationally for their simulated smart city project, traveling around the US to present how they’ve become the Smart City of the South. NC State is a leading organizer, bringing industry and universities together annually at the Smart Cities Summit to accelerate Smart Community progress.
Through collaborative efforts, RTCC has catalyzed the cleantech sector resulting in over 12,000 jobs and $1.6B in annual investment in the sector over the past 8 years. The Triangle is number one in patents per capita in the US.
Partnership & Collaboration
Perhaps the most important indicator of the future potential of the region is evidence of alignment and collaboration. In the new HQ Glenwood facility, RIoT and HQ are co-locating government, academic, industry and entrepreneur partners, specifically to create the day-to-day friction that can lend heat and fuel to economic growth efforts.
Organizations like Red Hat, Citrix and All Things Open continue to brand the region as inclusive and forward-thinking through promotion of an “open source mindset”, community involvement and support of startup programs.
A significant new development in the downtown startup scene is IBM’s decision to plant their executive management team for IBM Watson IoT into RIoT Labs. IBM demonstrates extremely forward thinking in engaging the startup ecosystem directly and with decision-makers that recognize that the future economy is driven by entrepreneurs and out-of-box thinkers. Their presence provides a unique opportunity for small companies to get access to experience, relationships and tools that help them scale more quickly. More companies are looking to follow IBM’s example, launching intrapreneurial projects off of their corporate campuses.
Call to Action
Tom noted that it is impossible to mention every success and effort happening across the region in a short talk. But the key takeaway, is to continue to collaborate supportively and truly think as a region. It’s not healthy to have a Raleigh versus Charlotte attitude. Or Asheville versus Wilmington. The top example of the last 30 years in leading the economy has been Silicon Valley. It takes as long to drive from San Jose to San Francisco as it does to drive from Raleigh to Charlotte. But you never hear externally that those ends of the Valley are competing against each other. They act regionally to the benefit of all.
The momentum is started to work together across government, academia and large and small business to be the next Silicon Valley. North Carolina is poised to make that happen.
