Madison’s Tech Future: 5 Ways It Could Succeed, 5 Ways It Could Fail

Silicon Valley wasn’t built overnight. Neither were smaller, newer tech startup hubs like Austin, TX, and Boulder, CO.

In the Midwest, Madison, WI, hasn’t yet reached that level, but the city is gradually and quietly positioning itself to at least join the conversation. Xconomy has been closely following Madison’s aspirations to be a healthtech startup epicenter, and the capital of Wisconsin is also starting to grab some attention as an up-and-coming area for information-technology jobs in general.

Last month, Forbes ranked Madison fifth on its list of metros with the fastest-growing information clusters, a category that included software, publishing, broadcasting, and telecommunications services. That followed a similar study last October by the Progressive Policy Institute that found Dane County, where Madison is located, had the ninth-highest growth in tech/information jobs between 2007 and 2012.

Zach Brandon, president of the Greater Madison Chamber of Commerce and former vice chair of public policy for the Angel Capital Association, thinks the time is ripe for Madison to claim a place among the nation’s leading tech centers.

“If every region is going to have one of these tech powerhouses, what’s the upper Midwest?” Brandon says. “It’s not defined yet, and Madison has just as much of a claim to that as anybody else.”

Business leaders in Chicago—with its larger pool of tech startups, talent, and venture capital—might argue that Madison isn’t in the same league right now, but Brandon is probably fair in saying that no Midwest city has emphatically established itself as the region’s tech capital in the way that San Francisco has done on the West Coast.

So, can Madison ascend the Midwest throne? Here are five reasons why it could succeed—and five ways it could fail.

First, the factors working in Madison’s favor:

1. Young talent: Ask anyone how Madison is building an IT cluster, and one of the sure responses is the talent flowing from the University of Wisconsin-Madison, whose computer science graduate degree program tied for 11th in the most recent U.S. News & World Report rankings.

“We find that we really enjoy recruiting from the university,” says Anne Raimondi, the vice president of people operations for San Francisco-based Zendesk, which opened a Madison office in 2012. “We find a great population of talent there across the board.”

Zendesk has 51 employees in Madison representing a range of departments, including IT, sales, and customer service, Raimondi says. Outside of its headquarters, Madison is the customer-service software company’s only domestic office. That’s a testament to what’s brewing in Madison, Brandon says.

2. Critical mass of diverse startups: It’s difficult to identify the tipping point when a city has developed a self-sustaining tech cluster, but observers say Madison is getting there. One sign is that computer programmers are starting to feel like even if their startup fails, “they know there’s another company around the corner they can go to,” says Mark McGuire, co-founder and CEO of Madison-based Nextt, a private online social network. “That has changed, I think, in the last two to three years,” McGuire said during the recent Wisconsin Entrepreneurs’ Conference in Madison.

More than 15,000 people in Dane County hold information-related positions, according to 2012 U.S. Bureau of Labor Statistics data provided to Xconomy by the Madison Region Economic Partnership (MadREP). Those employees work for companies like … Next Page »

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