Software Hub in Minnesota

Competing through our distinctive strengths

Cities all over the world have attempted to replicate Silicon Valley with varying levels of success. Decades ago, so did we, in Minnesota. VC based software startups didn’t sprout. We are more the bootstrapping kind. Over the years, several local venture capital firms left town for California and set up scouting stations to encourage any promising software startups to move there.

The circumstances have changed. The Bay Area is going through crushing issues of housing, expenses, and traffic. In the San Francisco metro area, an annual income of $117,400 for a family of four qualifies as “low income.” Even earning six figures might not be enough to make ends meet. Talented developers with families are being forced out of that market.

Covid19 and the environmental situation has further impacted Silicon Valley’s main competitive advantage. Forbes in April reported from a survey of VC’s that they would be slower to deploy their investment funds into start-ups.

Software companies leaving California in droves is no longer a secret. In the national popular press, Portland, Seattle, Austin, even Washington, D.C., and Detroit are commonly mentioned as attractive places for where they are going. Minneapolis-St. Paul is often missing from such a list.

We have always been considered family-friendly. I saw first-hand how difficult it was to move someone to Minnesota unless they were originally from here. Ironically, if someone actually spent a few winters, they were equally difficult to be transferred out despite the cold. Retaining and recruiting talent, with families, in an innovative climate is our bona fide edge. People gravitate naturally towards places that have authentic advantages.

Lately, some entrepreneurs are locating their software startups in the North Star state by tapping into our ingrained strength and inventive culture. They demonstrate that building national and international software companies is possible here. These exemplars deserve our drumbeat. We must leverage Greater MSP efforts to position Minnesota as a great place for software companies.

Tom Salonek grew up on a farm near the Twin Cities. He got his degree in computer science from the University of St. Thomas and later was an instructor there. His executive education was from the Harvard School of Business and the Massachusetts Institute of Technology. When the entrepreneurial urge hit him, he didn’t think of anyplace else but home. He founded Intertech here in 1991.

The company has 83 employees that build software for organizations and also teach them how to make it. They’ve been trusted by some of the world's top organizations, including NASA, 3M, Intel, Microsoft, British Petroleum, and the United States Air Force, Army, and Navy.

The company’s national awards include being named twice to INC 500/5000ʼs list of fastest-growing companies; ‘Top 30 firms in Tech’ by Fortune Magazine and ‘Top 10 consulting firms in America’ by Consulting Magazine.

Salonek was named one of Minnesota’s top business leaders under 40 and credits all these accolades to the team.

Chris Smith came to Minneapolis as Managing Director, Coral Group, a venture capital firm. Smith’s formative professional experiences were with IBM’s venture capital group Accenture and Xerox. His BS is from Syracuse University and an MBA from the University of California, where he was an IBM venture fellow. ()

Today, he is the co-founder and CEO of a 60 person Kipsu located at the edge of downtown Minneapolis. The company has a global presence in all 50 U.S. States and 45 countries.

Having experience with invested companies in Silicon Valley, Europe, and Israel, he chose Minnesota to locate Kipsu because of the substantially lower cost of building his company without compromising talent quality.

Kipsu has pioneered a category in the software industry called Real-Time Engagement or “RTE.” It facilitates guest engagement throughout the customer journey and across all aspects of the services offered. ( ) The employees communicate with guests through simple text requests instead of calling or waiting in line at the front desk. Guests appreciate the ease of reaching hotel personnel without having to download an app. The company now serves leaders in the hospitality, facilities management, healthcare, shopping, and transit segments. The goal is to transform any transaction into a relationship with the customer.

These are just two examples. With the ability to attract and retain very high-quality technologists, Minnesota is a fertile ground for a successful

software community at a substantially lower cost. We already have the key pillars — talent, technology, and culture. If we build on these assets in the new normal and tout them, capital will come chasing!

We have built many great companies here before. We can do that in software. Moreover, a software hub can become a natural gateway for a new group of emerging technologies created by a new generation of entrepreneurs.

A version of this article first appeared in Twin City Business Magazine in October 2020.

To see other opinion columns go to medium.com/@rajivtandon.

Dr. Rajiv Tandon is executive director of the Institute for Innovators and Entrepreneurs and an advocate for the future of entrepreneurship in Minnesota. He is an adviser to fast growth Minnesota CEOs. He can be reached at rajiv@mn-iie.org.