The Greater Raleigh Chamber of Commerce web site shines like a beacon of what once was. It boasts that the Raleigh-Durham-Chapel Hill metro area, which comprises Research Triangle Park in North Carolina, was named ’The Best Place to Live in America’ by Money magazine in 1994 and ’The Best City for Business’ by Fortune magazine in 1993.
The Greater Raleigh Chamber of Commerce web site shines like a
beacon of what once was. It boasts that the Raleigh-Durham-Chapel Hill
metro area, which comprises Research Triangle Park in North Carolina,
was named ’The Best Place to Live in America’ by Money magazine in 1994
and ’The Best City for Business’ by Fortune magazine in 1993.
While very few large companies are headquartered in RTP, this honor is
no surprise, as the area houses major offices for Cisco Systems, IBM,
Biogen, Ericsson, Motorola and Nortel. It’s also home to universities
such as Duke, North Carolina State and the University of North Carolina
at Chapel Hill, which spawn numerous tech-savvy entrepreneurs to help
fuel the local economy.
Lost its luster?
But what has RTP done lately? With Linux vendor Red Hat the only
significant technology IPO to come out of the area in years, RTP has
lost its luster to the outside world as a hi-tech hot spot. In fact, the
area has become more of a Bermuda Triangle for technology companies,
with the majority opting to be bought out, rather than go public.
Mitch Mumma, general partner at venture capital firm Intersouth Partners
in Morrisville, NC, says there were no other VC firms in the area when
they opened 15 years ago. And there were not enough outside VC firms
willing to invest in RTP companies, which hindered their growth.
RTP’s hi-tech explosion was also stalled by the universities, which
chose to license technology straight from their labs and ignored the
benefits of entrepreneurial commercialization, according to Monica Doss,
executive director of the Council for Entrepreneurial Development
This lack of momentum has taken its toll on PR agencies in RTP such as
TechKnowledge Communications in Raleigh, which has been operating for 11
years. ’It comes and goes in waves,’ says president Ben Kittner. ’It’s
rising lately, but there were periods when I wondered what was next for
us. Fortunately, things always came through, but it has not always been
PR pros outside of the Triangle seem more knowledgeable of RTP’s
failures than its supposed recent successes, and when asked about
emerging areas for hi-tech, are more likely to point to Atlanta, Austin,
Denver or Washington, DC.
’I don’t think (RTP) is a hot spot on our radar screen,’ says
Golin/Harris president Dave Gilbert, adding that they have no clients in
Richard Edelman, president and CEO of Edelman Public Relations
Worldwide, says they are only servicing one client from RTP, Ericsson.
’They (RTP) have done quite a good job of attracting pharmaceutical
companies, but they’ve hit the wall when it comes to technology,’ he
says. ’It’s a wonderful place to live, but it’s not a place we would put
an office,’ he adds, noting that RTP has the ’Philadelphia problem’ of
being located between two major cities.
Want more evidence? Brodeur Worldwide is the only agency in PRWeek’s
hi-tech top 25 in the area. (Ruder-Finn does service some hi-tech
clients from its Raleigh office). ’We go to locations where it’s
necessary for our clients,’ says Rob Key, SVP and group manager of Cohn
& Wolfe’s New York corporate/technology group. ’There hasn’t been a need
to drive expansion in that area.’
But many within RTP say the area has never slowed down and is now on the
upswing. And they point to Red Hat as the great white hope that promises
future success for the region.
’It’s significant because there was so much attention paid to it,’ says
Mumma. ’(Red Hat) had a lot of PR value for the Research Triangle, but
that’s not the whole story. There’s plenty of other stuff going on in
IPOs on the rise
Since the Red Hat IPO, TechKnowledge’s Kittner says there have been more
out-of-town investors. The amount of VC funding leapt fivefold from
dollars 50 million in 1995 to dollars 250 million in 1998, and then
doubled to dollars 500 million this year, according to Mumma. Bill
Glynn, a partner at Southeast Interactive Technology Funds in Durham,
says he now sees a deal a day, and Doss says RTP expects four to five
IPOs in the next quarter. CED’s October Venture Update lists seven new
local companies that received funding the previous month, most of which
are dot-com companies.
According to Janet Swaysland, US GM for Brodeur Worldwide, RTP is
perfect for entrepreneurs looking for a better quality of life than
Silicon Valley or Boston can offer: a family environment, lower cost of
living and quality education. ’A lot of start-ups look at the path that
large companies have cut and say that this is a good place to be,’ says
Graham Wilson, chairman and CEO of Capital Communications in Cary.
The dearth of hi-tech firms in RTP also means that Brodeur can mine the
region unperturbed. Its office, originally launched in 1995 to service
IBM, now services approximately 20 dot-com, hardware, networking and
medical technology device companies in and around RTP. According to
Swaysland, growth at the Raleigh office has been on par with other
Brodeur offices since it opened.
Brodeur may not be alone for long, however. Copithorne & Bellows (now
called Porter Novelli Convergence Group) senior associate Jon Bornstein,
who has been telecommuting from the firm’s Boston office for the past
two years while living in Wake Forest, NC, says C&B plans to open a
Raleigh office during the first quarter of next year. ’There are so many
technology companies here and very few agencies that know how to do
technology,’ says Bornstein, adding that most agencies in RTP specialize
in areas such as sports marketing, community relations and
Kittner says the increase of hi-tech companies in RTP is also providing
opportunity for smaller, local agencies. ’Big companies usually go to a
New York or another out-of-town agency, and there hasn’t been much
opportunities for local firms to do more than project work,’ says
Kittner. ’But when the local dot-coms get funding, there’s more business
Where’s the buzz?
So with all these new companies and all this money pouring in, where’s
the buzz? Swaysland argues that Raleigh just isn’t spending much money
to promote the region nationally. The older companies in RTP also
haven’t done much of a PR push, according to Mumma. ’SAS Institute is
the largest private software company in the country, but they have no
interest in PR,’ says Mumma. ’We’re disadvantaged by some successful
companies that are not interested in a national PR blitz.’
What’s next for RTP? ’If you take a look at other areas of the country
and the number of technology IPOs, we lag behind them,’ says Mumma. ’But
the bottom line is that it’s coming.’ And a dose of PR for RTP couldn’t