Photo by Mark Rhodes Michael Oppenheim has found plenty of high-tech opportunity at the Whitlock Group and its spinoff, Passage Software.

Technology on Tap
Richmond's info-tech, biotech and microelectronics
industries have exploded onto the scene in the 1990s.

By Courtney Miller

For the past few months, Michael Oppenheim's career has been in cyberdrive. The 32-year-old executive traded in his management job at one of Richmond's leading e-commerce consulting firms to help pilot Passage Software — his former employer's first official spinoff.

In one doubleclick, Oppenheim went from overseeing 50 employees in The Whitlock Group's service delivery division to working with a handful of software developers and managers.

"It was a great opportunity," says Oppenheim, who had only been working at Whitlock for 18 months before plunging into Passage Software. "I had been doing consulting for a while," he recalls, "and it just seemed like the right time to try something new."

The spin-off, which occurred in June, was designed to promote new software called UML Factory. UML stands for unified modeling language, which provides significant shortcuts for software developers. If the program were compared to building a house, it would allow developers to save time by letting them scan the blueprints into a computer and simply watch the house appear — thus eliminating the nailing together of each individual board.

"We had been working on the product in various forms for years," Oppenheim says. "It finally reached the point where we felt it needed its own company to do well." Passage Software expects to complete a test version of the software by year's end, and the little company hopes to make it to market early in 2000.

Peter McElhainney, who leads Whitlock's marketing division, says that The Whitlock Group wasn't looking to sire a spin-off. "Our objective is not to spin off companies, it's making our clients happy," he says. But "if we come across something like Passage Software, which was a brilliant concept that wasn't directly tied to our core mission, the only thing to do is to give it its own space."

The Whitlock Group and its offspring, Passage Software, aren't alone: Technology businesses throughout the Richmond area are putting their companies through similar spin cycles. With two generations of home-grown high-tech ventures and a wave of relocating newcomers, the Greater Richmond area is breaking out of its corporate cocoon, says Robert Stolle, executive director of the Greater Richmond Technology Council.

Technology employment in Richmond has surged tremendously since the beginning of this decade: Between 1991 and 1998, it increased 15.6 percent to 36,672, according to a study conducted by the technology council. Last year jobs in technology-intensive industries represented 7 percent of total employment in the area. More people in the region are now working in technology than in wholesale trade or public utilities, according to the study.

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Richmond's biotech and microchip employers have grabbed most of the high-tech headlines, but the boom in jobs is more closely linked to the rapid development of info-tech companies. These local software, hardware and networking companies have grown almost 92 percent in the past six years, Stolle says.

SyCom Technologies, a systems integration and consulting company in Richmond, is a prime example. The company has been vastly successful selling itself as a builder for the information superhighway, says Bob Nash, a SyCom vice president. The company, which currently employees nearly 80 people, has experienced dramatic growth in the past three years. SyCom's revenues have increased 50 percent to 60 percent each year since it opened its doors in April 1996, says Paula Gulak, one of the company's five founders.

"I think we are seeing a tremendous growth in the area," Gulak says. "Richmond has a very relationship-based community, and I think it is a little bit harder for new companies coming from outside to start up here than it is for companies that have been doing work [here] all along."

New companies, however, are discovering that Richmond is a good place to bring a technology business. The city is slowly shaking its reputation as a sleepy Southern town deeply rooted in tobacco and banking. As it blends its old image with its new one, Richmond will become more attractive to highly mobile technology companies, Stolle says.

"While Richmond is becoming more well known as a center for technology, it is really one of the problems that still exists. To be totally candid, most people outside of the Richmond region don't think of Richmond and technology in the same sentence. They still think of Richmond and the Civil War or banking or tobacco."

People who move high-tech businesses to Richmond usually have some positive experience with the city before they relocate here. Keith West, for example, enjoyed quick trips to Richmond while he was in the Navy in Norfolk. "I had such a great time when I visited the city," he says, "and I knew that it had the [right] kind of atmosphere" to support a high-tech start-up.

About five years ago, West and a partner founded a small Internet company called Egonet, which provides travel information and builds Web sites for hotels. They started the company in North Carolina, and they were looking for a location in several strip malls near West's home outside Charlotte.

Then he remembered Richmond, which he had long admired for its efforts to preserve its historic character. "Once business became stable," he says, "I realized it was something I could do anywhere, and I knew that I wanted to do it in Richmond."

Info-tech businesses such as Egonet and SyCom are the backbone of Richmond's emerging technology sector. But their owners readily admit that without the emergence of new technology industries — such as biotechnology and semiconductors — their business growth would slow down.

"From an information technology standpoint, we touch and intersect with all other technology sectors," Gulak says. "Quite often new technologies or technology services are born at those crossroads or intersections. The success of other technology sectors helps with the continued growth and strength of all sectors."

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Biotechnology and semiconductor manufacturing are extra important to the Greater Richmond area because they "are creating a base for entire new industries, not just expansion of current industries," says Stolle at the Greater Richmond Technology Council. "As Richmond's base of financial and manufacturing companies decreases, it becomes increasingly important to develop new industries."

By luring biotechnology businesses to Richmond, the city has set itself apart from Northern Virginia, which is considered one the nation's hotspots for information technology and telecommunications, Stolle says. The president and CEO of the Virginia Bio-Technology Research Park, Robert T. Skunda, seconds Stolle's observations. The foresight of billing Richmond as Virginia's biotechnology center has become more apparent in recent years as the field has unfolded, Skunda says.

The industry — which includes drug development, genetic engineering, environmental science and medical research — is growing quickly. And the biotechnology park, which was established in 1992, is positioning itself to prosper along with this emerging industry in the new millennium. The park itself is entering a new stage in its development, Skunda says. It has successfully transitioned from a speculative experiment into a viable venture, and now it wants to become the technological hub for the Richmond area.

"We'd like people to look at the park as a symbol for the growing technology community in Richmond," says Skunda of the 34-acre complex located downtown. "There are an awful lot of great companies here, and we hope the park can be looked at as the crown jewel."

The park currently consists of sixbuildings, including the recently completed Biotech Five, which will house the North American Research and Development Center for Infilco Degremont Inc. The 13,500-square-foot, $4 million facility will bring total development at the park to approximately 315,000 square feet, and it will push the employee count over 680.

The biotechnology park is closely associated with Virginia Commonwealth University's medical school and its MCV Hospitals. Companies in the research park can take advantage of those world-class research capabilities, Skunda notes. The park plans to further capitalize on its relationship with VCU by "harvesting" research from the university that has the potential to create new businesses that would thrive in the park.

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The biggest confluence reached by the biotechnology industry has been its intertwining with the semiconductor sector, Skunda says. Companies are now using microelectronics technology to create monitors and other devices that are implanted in humans.

Stolle looks upon this techno-intertwining as an enormous advantage to the Richmond area, which boasts a brand new semiconductor plant and another one under construction. White Oak Semiconductor produces chips in eastern Henrico County, and Motorola still plans to build a plant in eastern Goochland county.

These two ventures have attracted more than 65 suppliers and equipment manufacturers to the Richmond area, Stolle says.

"We now have a solid foundation to build a tremendous technology industry in the area," Skunda says. He sees the convergence of microelectronics, bio-technology and information technology as Richmond's best chance to become a major technology center in the coming decade.

Although the Motorola plant has been delayed several times and its construction schedule is uncertain, Stolle still hails the coming of Motorola as the pivotal event in Richmond's technological development.

He also is encouraged by Motorola's plans to add a research-and-development center to its plans for a fabrication plant. "Motorola is making a tremendous investment," Stolle says. "There is every indication that they are here for the long term."

One of those indications is the $6 million of equipment the company donated to Virginia Commonwealth University's new school of engineering. VCU and other area colleges and universities are helping to create an atmosphere in which the technology industry can flourish, Stolle says.

The semiconductor plants would not have come to the Richmond area without the support of VCU and the School of Engineering, Stolle adds. When full, the school hopes to have 1,000 students enrolled, and the faculty is working with industry leaders to ensure that their curriculum reflects real-world needs.

"It is this kind of experience that employers find very valuable," says Dean Rob Pearson, who also teaches at the school. Pearson expects that most of the 60 students who are expected to graduate in May will find jobs in the industry at starting salaries of $40,000 to $45,000 per year.

"I recently received numerous inquiries at a conference I attended about our students and how many of them could be hired," Pearson says. "The industry is starved for employees, and our students should do very well."

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The relationship with VCU should prove valuable to Motorola, which along with many other high-tech manufacturers in the area is combating an almost negative unemployment rate.

That rate, which has been around 2 percent for the past year, may be the biggest indication that Richmond's technology sector is not just emerging but bursting into the overall economy.

It also has helped the city retain economic strength even in the face of cutbacks in the more traditional industries, such as manufacturing, banking and tobacco, Stolle says.

"If you look at the city's economy 10 or 20 years ago, it could not have withstood the blows it took when banking left, or when tobacco curtailed its business or when manufacturers turned to automation. ... It would have been a devastating blow, but because of dramatic growth in the technology sector, it has almost gone unnoticed," Stolle says.

Low unemployment, however, is also the biggest limiting factor of Richmond's technology sector, Stolle says. The result could be a slowing in Richmond's technology growth for the first time in the past 10 years.

The Richmond area "definitely wouldn't have been as attractive to me if I had known that finding workers was going to be so difficult," West says. "It really makes the educational institutions and their students in the area all the more important."