(Editor’s note: This post was updated at 9 a.m. on March 24.)
It’s a story that you won’t be hearing at GLI’s annual meeting – the entrepreneur who starts a cutting-edge business in Louisville, then moves it to a major city in pursuit of talent and capital.
But that’s Rob May’s story, though he doesn’t think it has to be the defining story for Louisville.
Three years ago, May started Backupfiy in Louisville, developing software designed to back up data stored in cloud-based services such as Google Gmail or Flickr’s photo-sharing site.
(Backupify was inundated with 15,000 new subscribers earlier this month after Google lost emails and other data at the end of February, an increase in business that in turn caused Backupify a service bottleneck.)
But May, an electrical engineer by training, could find neither the tech expertise nor the investors here to expand his company. So a year ago, he moved it to Boston.
He ended up posting about it late last year on Xconomy Boston:
Backupify was not a good fit for the Midwest because we had a difficult time finding the right technical talent, and we had a difficult time finding funding. When I first started raising money, we were able to round up about $150K on a $1M (valuation) in Louisville. That was just enough money to make sure we accomplished nothing significant and was the initial impetus for looking outside the city.
May adds the story didn’t have to turn out like that, and he has lots of company in Louisville’s tiny consumer tech sector.
With a little vision, ambition, investor education and a lot of luck, Louisville could become Austin, with hundreds of high-tech start-ups, say May and others.
“We’re always compared to Austin, so why can’t we be?” said Jay Garmon, who blogs for Backupify from Louisville. Louisville and Austin are not so different, with each being a “hip town in a not-hip region,” Garmon said.
Both offer engineers and entrepreneurs a great place to live with parks, arts, restaurants and amenities of a larger city without the overhead and bureaucracy, he said: “I don’t understand why we don’t see ourselves as major league.”
And, if not exactly Austin, then Louisville could be a regional tech center, with more and more consumer-facing, high-tech businesses, Garmon said.
It’s nice that Louisville has United Parcel Service and Ford, he added. “I’ve been putting noses out of place,” Garmon said. “I’m glad UPS is here and we have a air hub. But at the end of day, I don’t see world-changing jobs in distribution.
Though Louisville has had manufacturing coups recently, such as the $600 million Ford investment at Louisville Assembly Plant, “I wouldn’t hitch my wagon to that falling star.”
The world has changed, May said. Twenty years ago, the largest U.S. companies measured by market capitalization were companies such as General Electric, IBM and General Motors.
Today, it’s Apple, Google and Microsoft, he said.
During the Great Recession, cities such as Louisville – heavily dependent on low-skill jobs – got beat up, with unemployment higher than the national rate.
Tech centers such as San Francisco didn’t even notice, with far more jobs for people who can write applications than people to fill them.
A recent National Public Radio story reported that Dice.com, one of the leading employment sites in the tech sector, has 30 percent more job openings listed than last year. Unemployment for tech workers is 5.9 percent — significantly below the national rate of about 9 percent.
Late last year, Garmon collaborated with Jason Falls, Social Media Explorer, to transform the Social Media Club Louisville into Louisville Digital Association. The name change signifies a new mission of making the group tech evangelists to Louisville’s government officials, deal makers and economic development officials.
May, Garmon and others have lobbied new Mayor Greg Fischer, private equity leader David Jones, Jr. and economic development officials to get them more focused on technology.
But May injects an element of reality into the discussion of how much of a revolution can happen here, and how quickly it can happen.
“I don’t think Louisville can become Silicon Valley,” he said. “More realistic would be doubling the number of jobs created by new high-tech businesses during the next eight years.”
May says there are structural issues and cultural issues holding back Louisville, including a lack of people with start-up experience, entrepreneurs and investors.
First, Louisville investors aren’t as comfortable investing in tech as investors in Boston or San Francisco. Though he found his first investors in Louisville, May had to go to Boston to raise enough capital to make Backupify a viable business.
Second, Louisville lacks not just tech talent – the engineers, code writers and site designers – but also a start-up culture.
“What’s been interesting in comparing and contrasting Louisville to Boston is Boston supports a type of (executive) Louisville doesn’t have … the guy who makes a career out of working in start-ups,” May says.
Backupify hired a vice president of marketing, who, in his early 40s, “has gone from start-up to start-up,” and who thrives on the hours, the problems and the unpredictability. That said, the serial start-up execs aren’t necessarily the people who can turn it into a large corporation, May said.
Just because Louisville’s not on a coast doesn’t mean it’s destined to be a high-tech backwater, May added. Look where the great innovators of the 20th Century were, he said: The Wright Brothers in Dayton, not New York, Henry Ford in Michigan, not the financial markets.
Garmon noted how a number of high-tech or tech-oriented consumer businesses have sprung up in Lousiville including Zirmed, Keepio and Try It Local. What Louisville hasn’t had is a local start-up turn into an economy-transforming company in the way Dell – founded by University of Texas at Austin student Michael Dell – transformed Austin, he said
Louisville needs either a “giant home run like Dell to show up and change the game, or a whole lot of singles – 20 Keepios, 100 Zirmeds – to keep the ball rolling.”