Portland-based technology entrepreneur Nick Pontacoloni has lofty goals for his new venture, OwnerAide, an online networking, referral and review service for the home-improvement market.
“Our goal is to simplify the home improvement process using technology,” he said. “I think we’ve got a $100 million company here.”
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With OwnerAide, which officially launched this month, Pontacoloni and his business partner, Michael Zizzania, are hoping to accomplish what few others in Maine have done: build a technology company from the ground up that eventually employs hundreds of people in high-paying jobs.
Despite a high percentage of small businesses in the state, Maine remains a relative wasteland when it comes to technology startups with high growth potential.
Only a handful of high-tech startups in the state have grown into companies with large staffs and multimillion-dollar revenues.
The problem with Maine is a combination of perception and reality, business specialists said.
Most entrepreneurs don’t think of Maine as a good place to start and grow a high-tech business, they said, in part because so few have successfully done so.
Maine also lacks certain elements that have helped turn other states into high-tech destinations, such as a market-dominant technology firm, a glut of highly skilled technology workers, or a prestigious research university that focuses heavily on science, technology, engineering and mathematics, often referred to as STEM, they said.
“There is not enough STEM education in Maine,” said Scott Burnett, marketing director for the Maine Technology Institute. “We have some great liberal arts colleges, but they’re just liberal arts. We need to start kids earlier (with STEM education), and we need to follow through consistently.”
According to the state Department of Labor, Maine had fewer than 23,000 STEM-related jobs outside the medical field in 2010. That number was expected to grow by just 5 percent over the following decade.
The Maine Technology Institute, created by the Legislature in 1999, is one of several organizations trying to increase the number of technology startups with high growth potential in the state. It has issued more than $178 million in grants, loans and bond money to dozens of startups, and Burnett said the institute’s success rate has been encouraging.
“The employment growth in these companies is substantial,” Burnett said, adding that a recent survey of companies that have received development loans from the institute found that they have increased staffing by an average of 40 percent over the past three years. “This is where employment’s happening.”
Hundreds of other organizations help promote the development of high-tech startups in Maine, including colleges and universities, industry groups such as TechMaine, venture capital firms, the Maine Center for Entrepreneurial Development, networking groups such as Casco Bay Technology Hub, and nonprofits such as Blackstone Accelerates Growth.
Those efforts soon will also include a new promotional and educational event called Maine Startup and Create Week, scheduled for June.
ATTITUDE ADJUSTMENT
Still, a lot more needs to be done to boost Maine’s high-tech economy, said Jess Knox, state “innovation hub leader” for Blackstone Accelerates Growth, a pro-entrepreneurship initiative funded by the New York-based Blackstone Charitable Foundation.
For instance, Maine should do a better job of promoting itself as a tech-friendly state, Knox said.
“We have this very historical thing about not talking about how great we are,” he said.
A number of cultural factors have hindered Maine’s potential to become a hub for innovative startups, Knox said, including a lack of self-confidence, aversions to risk and change and an over-reliance on government to lead the way.
“We welcome everybody’s help, but we’ve got to do it ourselves,” he said.
Knox said there is a disconnect between Mainers’ love of their state and their belief that Maine is not a great place to do business.
He said the solution is to trumpet the state’s high-tech startup success stories, such as veterinary diagnostics provider IDEXX Laboratories Inc. and payment-processing firm WEX Inc., both based in Greater Portland. The goal would be to raise Maine’s profile outside the state and boost the confidence of entrepreneurs inside the state.
“We have forever told ourselves that we have a problem,” Knox said. “It’s almost like a self-fulfilling prophecy.”
The actual number of high-tech startups in Maine is difficult to track, Knox said.
Still, it is possible to get some idea of the prevalence of nascent technology ventures in the state that have the potential to become major employers.
Think Tank, a chain of co-working spaces based in Portland, has about 110 members representing roughly 70 small companies, founder Patrick Roche said. Co-working spaces are large, open office spaces often shared by entrepreneurs and small businesses.
Of those 70 companies, about 10 could be considered high-growth-potential tech startups, Roche said.
“It’s still a small percentage,” he said.
Far more common are technologists who live in the Portland area but work remotely for larger companies based outside Maine, he said. That trend demonstrates how, despite people’s desire to live in the state, they often can’t find suitable jobs working for Maine-based companies.
“What we end up having here is a lot of (chief technology officers) for companies that are based outside of Maine,” Roche said.
Another large group of technology workers in Greater Portland are independent contractors, he said. They are commonly known as 1099ers, a term that refers to the Internal Revenue Service’s Form 1099 for miscellaneous income.
Roche said he doesn’t believe Maine’s lack of home-grown tech startups is due entirely to a perception problem.
Poor technology infrastructure, high business taxes and the lack of a concerted economic development plan to foster high-growth startups are real issues that need to be addressed, he said.
“We don’t even have good Internet service – we’re 49th in the nation,” Roche said. “What we’ve got here is cheaper real estate and ocean views.”
‘SILVER BUCKSHOT’
According to a study by the Maine Technology Institute, there are more than 300 private and public organizations vying for tax dollars to promote entrepreneurship in Maine.
Unfortunately, those dollars are limited, and the various groups rarely work together on coordinated, long-term efforts, business specialists said.
It’s a phenomenon Knox calls “silver buckshot.”
That scattershot approach to economic development is symptomatic of a leadership void and a lack of political will in Maine to specifically target the high-tech sector, Burnett said.
“It’s like Maine is caught,” he said. “It lacks the will to make the hard choice, the investment.”
Burnett agreed that it would be more effective to consolidate the state’s many economic development efforts and narrow their focus.
Rather than investing a little bit of money in a wide range of small businesses, a better approach would be to home in on a few industries with the highest growth potential in Maine, he said.
One of the most promising industries is ocean science and aquaculture, Burnett said.
“Maine’s strength, its indigenous resource, is the ocean,” he said. “That’s where Maine could focus.”
The Maine Technology Institute is finalizing a study of the potential for various technology sectors that it plans to publish within the next few weeks, Burnett said.
He hopes the study will be used as a road map by state lawmakers and others concerned with economic development in the state.
Robert Chatfield, chief financial officer at Fluid Imaging Technologies, a high-tech imaging equipment maker based in Scarborough, said the Maine Technology Institute is the most effective organization in the state at fostering high-tech startups.
Still, he said it is behind the times in terms of how it evaluates companies for grants and loans.
“They’re still working off a business plan that was developed in 1999,” Chatfield said, adding that the institute needs to narrow its focus.
Other problems in the state include high taxes and a lack of collaboration between research institutions and businesses that could help bring their innovations to market, Burnett and Chatfield said.
Aside from creating the Maine Technology Institute, Maine’s elected officials have expended relatively little effort championing technology startups with a high potential for job growth in the state.
Most of the recent economic development efforts at the state level have focused on luring larger businesses to the state, such as Gov. Paul LePage’s recent proposal to give tax breaks to manufacturing firms that invest more than $50 million, create at least 1,500 jobs and locate on one of the state’s two former military bases.
That lack of focus at the level of state leadership has placed most of the responsibility for promoting technology startups to nonprofits, trade groups and local officials.
Their efforts are making a difference, Burnett and others said, but they are no replacement for having a strong focus on technology education and workforce development at the state level.
STARTUP STARS
Despite those challenges, there are a number of startup success stories in the Portland area that have proven it can be done. In addition to IDEXX and WEX, those companies include Fluid Imaging Technologies, digital gifting firm CashStar Inc. and mobile-app marketing firm Liquid Wireless, which was acquired by magazine subscription seller Publishers Clearing House in 2012 for an undisclosed sum.
Fluid Imaging Technologies was founded in 1999 with technology developed at East Boothbay research institution Bigelow Laboratory for Ocean Sciences. The company recently moved into a larger headquarters building in Scarborough with a staff that has grown to about 40.
Recently, it began hiring employees in cities outside Maine to market and sell the company’s product, a piece of equipment called a FlowCAM that analyzes and photographs microscopic particles suspended in fluid.
While there are advantages to being in Maine, such as a high employee-retention rate, Fluid Imaging Technologies has found it increasingly difficult to find job applicants with the necessary technical skills, Chatfield said.
“When we post for a mechanical engineer, for example, we get a lot of plumbers and heating technicians,” he said. “As we become more focused on developing specific applications for our clients, we will have to go outside of Maine to fill in the knowledge gap.”
Liquid Wireless founder Jason Cianchette has grown the company to a staff of 23 since starting it in 2008.
Liquid Wireless has developed a successful strategy for finding young, motivated and talented employees: It recruits recent graduates from Maine’s private colleges, particularly Bowdoin and Colby.
Technology firms in Maine have to be more flexible when hiring workers than those in other states, Cianchette said. Liquid Wireless hires people for their drive and potential, and then teaches them the technical skills they need.
In an unusual move, Cianchette said he started Liquid Wireless in Boston and later relocated the company to Portland.
He did so for personal reasons – “I wanted to live here” – but Cianchette said he has found some business advantages to being in Maine.
“Almost every person we’ve offered a job to has taken it here, and that would be unlikely in Boston,” he said.
J. Craig Anderson can be contacted at 791-6390 or at:
canderson@pressherald.com
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