Friday, August 1, 2014

Speak Your Piece: Brains and Broadband

03/12/2013

Across America, entrepreneurs are blossoming like spring flowers. They are cropping up everywhere. From the Silicon Prairie to the Southern Gulf to my back yard in northwest Montana, we are seeing start-ups grow successfully in unlikely places – creating jobs, innovating and attracting investment. We’ve made surprisingly swift progress. Diane Smith helped start a global tech company from a coffee house in Kalispell, Montana. One part of the recipe for success was a good Internet connection.When I founded a ground-breaking tech company in northwest Montana, I was asked repeatedly, “How will you ever be able to grow a tech business from a small town in a flyover state?” The answer was, easy … technology would make it possible. And it did.

My husband, our daughter and I had moved to Whitefish, Montana, in 2002 from the Washington, D.C., area. We’d looked all over America for a community that had four seasons of recreation, good healthcare and public schools (our daughter was then 8 years old) and enough restaurants that we didn’t have to cook every day. My background was in telecom so I had seen firsthand the kinds of opportunities for business, healthcare and education that the Internet was making possible. We believed that we could make a living just about anywhere that had fast and reliable communications connectivity, and we found it in Whitefish.  

I passed the Montana bar exam in 2003. In contrast to the Virginia bar exam I had passed years earlier, this time I studied for it not in a classroom but in my living room. In 2004 I was approached by a young entrepreneur with an idea for a revolutionary tech company. Combining his tech vision and my business skills, we launched a company in Kalispell, Montana, that today is known as Vubiquity, the largest global provider of multi-platform video services. In fact, still today, some of the most cutting-edge video compression and distribution technologies in the world are being developed in Kalispell by a team of brilliant tech pioneers who work with colleagues and customers located all around the world.  

By 2007 we had raised over $30 million for this company that we had launched in a coffee shop with wi-fi. It seemed as if every person in Montana was part of our success. From the brilliant advice we received (pre-sell to customers), to the contacts we made (so you need to talk with ESPN?), to our investors (angels, a Montana telco), public relations support (the local economic development folks helped us “buzz up”) and our amazing team (rock stars all), so many people and businesses in Montana supported us that some days we felt like a statewide effort rather than a start-up struggling to pay our tab at the coffee house. I have said this many times before, but I don’t believe we would have had nearly such swift success had we been located in a more populated community or state.

I am also an investor in Montana’s first angel fund. Over the past several years, we have reviewed all kinds of deals for Pacific Northwest companies. We have looked at and invested in businesses from low-tech to high-tech. Some have sputtered, others have been wonderfully successful. In addition to my own entrepreneurial experience, these companies remind me that we were right – technology makes it possible. 

NTIARural broadband access lags behind urban access in all forms of technology. But the gap has closed the most in basic wireless access. The rural/urban gap for basic wired broadband is 17.2 points, according to NTIA's analysis of advertised access speeds. The rural/urban gap in basic wireless service is 11.5 points. Click chart to enlarge.

Entrepreneurship is crucial for our nation and for our individual communities. Why? Because new companies – those less than five years old – create most new jobs in the United States. We often hear that small businesses create jobs. But not all small businesses are new businesses. Young, entrepreneurial companies grow jobs far more dramatically than older small businesses. That’s where technology comes in.

One hundred years ago, a thriving community likely had fertile land, extractable resources or a railroad. Today, thriving communities of all sizes and locations need entrepreneurs. They need their dynamism, their vitality, their sense of risk and possibility. To get off the ground, entrepreneurs need money, brains and broadband.

Money is the lifeblood of entrepreneurship for obvious reasons. Brains (or intellectual capital, as the money-folks like to call it) combined with money allow an entrepreneur to go beyond her own area of expertise to build the teams that make great commercial innovation happen. Broadband makes all of this possible – these days from just about anywhere.

All broadband technologies are important, but wireless broadband is particularly important for entrepreneurs who frequently work out of their homes, from the road and in ways that require substantial mobility. Like earlier mobile technologies, 4G networks bring opportunity closer than ever to a budding entrepreneur’s front door but at much faster speeds. These lightning-fast networks rolling out across the country are transforming how we conduct our business and are empowering rural entrepreneurs.  

That’s critical. Broadband connected businesses bring in approximately $300,000 more in annual median revenues than non-broadband adopting businesses ($400,000 annually vs. $100,000 annually), according to Connected Nation. Nearly one in three businesses earns revenue from online sales that account for $411.4 billion in annual revenues for U.S. companies. Sixty-five percent of home-based businesses use the Internet to stay in touch with customers, while 59% advertise or sell their goods online. Add to this the fact that 98% of U.S. counties had at least one high-tech business establishment in 2011 and it becomes pretty clear that mobile broadband is as vital a tool for entrepreneurs as money and brains. 

Entrepreneurship could be described as the opposite of flying an airplane: hours of sheer terror punctuated by brief moments of boredom. It’s not for the faint of heart, especially in rural and remote locations. But it’s an important tool in our nation’s arsenal to create jobs and a robust 21st-century economy. The right recipe of money, brains and broadband can make it happen anywhere. 

Diane Smith serves on the board of Mobile Future and was co-founder and chief executive officer of an Internet television and advanced media services company in Kalispell, Montana. 

Comments

Rural Broadband

A great statement and support for the success of entrepreurnship and how it impacts rural economies.  Virtually every state has communities with extraordinarily high quality of life yet no economic base from which to continue.  Aging is taking it's toll and there is little to attract younger families to sustain the community.  Except...  broadband and technology. 

There's a part of this scenario that I have to disagree with though.  The results of the NTIA broadband mapping project are misleading.  I live in a rural area only 30 miles from Albany, the capital of New York state.  By the NTIA definition, I have broadband.  In practice it's often not much better than dialup.  I used to get service via satellite but that was horribly slow and weather outages were frequent.  I now get service off of a Verizon cell tower - the only one serving our area.  Weather isn't as big an impact but speeds are nowhere close to advertised and I'm limited in upload/download capacity.  Hard to run a small business under these conditions let alone a large one. It would cost me $50,000, yes $50k, to have the local cable company run cable a mile and a half to me and they won't even do it because they don't have 25 homes per mile.

Simply put, this nation is woefully behind in universal broadband and the NTIA data paints a better picture than reality.

 

Great point

Thanks, DemographerBob. Your story is all too common in rural America. There is tremendous variance from place to place in broadband access. The NTIA report (in the chart and here) is based on "advertised" rates. Anyone living in a rural area knows that what's advertised and what's actually available are not necessarily the same thing. Also, that report doesn't factor in cost. If broadband is too expensive, it's equivalent to not being available, for all practical purposes.

Small cities like Kalispell fare much better than more remote areas. And we suspect high-amenity areas (like Kalispell, again), are going to fare better than other types of rural America. 

Diane Smith's story tells us what can happen when broadband is available and affordable. 

The story is different when there is no affordable broadband.

Jonathan Adelstein, former head of USDA Rural Utilities Service says there's a market failure in rural broadband. Others say the market will take care of rural if we adapt regulations to new technology and allow more flexibility.

Whatever we decide (or don't) about how to provide broadband service to underserved communities, the consequences for those communities are going to be huge. Sharon Strover at UT-Austin says rural communities that lack broadband will be crippled