Atlanta's Tech Boom

By Randy Southerland

When automated travel reservation provider Travelport selected the Atlanta area for its North American global distribution system operations, it joined a growing number of companies that see this Southern city as the place to be if you’re a technology-related company.

Travelport, which had purchased Atlanta-based Worldspan, decided to make the firm’s Cobb County location its new international headquarters, while adding about 300 jobs and investing $33 million in the area. Travelport also announced it was expanding its data center in Hapeville, Ga., while adding 100 jobs there.

The announcement was a boost for the metro area and helped to confirm that the technology industry is very much alive and well. The collapse of the tech bubble in 2001 had decimated the industry, but today it’s a very different story. Tech-related firms are expanding, bringing with them high-paying jobs that can range from $40,000 to $110,000 depending on the sector.

Annual growth for tech jobs is projected at 4.5 to 5 percent compared to less than 2 percent for all industries, according to the Technology Association of Georgia (TAG), an industry trade group.

The sector is growing faster than at almost any time since the boom years of late ’90s. These days the technology industry is more diverse than ever, and the emphasis is on creating products that sell, and best of all, make money for investors and shareholders.

“I would call it dynamic. And, by dynamic I mean is that it is fluid and ever changing,” says TAG President Tino Mantella.

Technology is broadly based and includes everything from flashy video games to old fashioned telephone lines. It’s data storage centers and Internet security. It’s software applications that facilitate financial transactions and its catchy ring tones on mobile devices. Technology is on the rise and Atlanta is fast making a name for itself as a center for the industry in all its many forms.

A prime attractor for tech companies is a pool of educated talent and its here that Atlanta has a decisive edge over other cities. The city leads the nation in highly educated 25- to 34-year-olds, the most coveted demographic in the country, according to economist Joe Cortright of Impresa Consulting. From 1990 to 2000, metro Atlanta increased its young adult population by 46 percent even as this group was declining by 9 percent nationally.

“One of the main things [that attracts companies] is that can they get [good] workers and keep them here,” says Carol Henderson, director of the Innovation & Technology office at the Georgia Department of Economic Development.

Atlanta’s nightlife, cultural and entertainment venues and general energy has proven a powerful draw for the so called “young and restless” who fall into this demographic group. It’s generally low cost of living has proven an advantage over high cost areas such as California or New York.

While Atlanta still lags behind such high tech centers as Silicon Valley, it’s fast making use of several advantages tailor-made for growing tech companies. These begin with the title of “most-wired city in America.” Miles of fiber optic cable were laid before the 1996 Olympic Games—as it turned out more than anyone would ever need—but that advance planning means there’s no shortage today.

In addition, data storage centers have sprung up across the metro area. While many keep a low profile to avoid industrial espionage, metro Atlanta is ranked No. 1 in that category as well, according to David Hartnett, vice president of technology industry expansion for the Metro Atlanta Chamber of Commerce.

These advantages have helped flower a diverse industry. One of the fastest-growing sectors is Simulation/Game Development. Companies such as Kaneva, CCP NA|White Wolf and Cadillac Jack, have stayed or migrated here. To feed the need for talent, several local colleges have launched gaming programs. Gwinnett Technical College, for example, recently launched its own simulation game developer program, which is now producing students with skills in game project management, programming languages and game artificial intelligence.

By hiring local talent, gaming companies can avoid the expense —which can push up wages by as much as $30,000—of attracting workers from other states such as California, according to Gwinnett Tech’s CIS program director John Thacher.

Local colleges have been responsive to industry needs by creating programs geared to their specific needs. After Gwinnett landed a major Hewlett-Packard data center using tax incentives, the county worked with the local technical college to create a new incentive for these companies.

“It was brought up by the data center community that they are constantly looking for highly trained workers,” says Melanie Brandt, business development manager for Information Technology & Advanced Communications at the Gwinnett Chamber of Commerce, “So Gwinnett Tech has taken it upon themselves to come up with a data center certification process [for producing more trained workers.]”

Software applications and content producers are also surging because “as the old saying goes, ‘Content is king,’” says Hartnett. This category includes the origination of programs and products such as digital streaming content for the so-called three screens: PDA, computer and television.

“The content could be anything from a ring tone to a game to a television show,” says Hartnett. “People are looking—software wise—to create an easier, more plug-and-play scenario for those three mediums.”

Internet security is also a major growth industry making Atlanta the national leader. Local start-up Internet Security Systems grew into a billion dollar national company before being bought by IBM.

While the metro area has dropped down in telecom following the acquisition of local stalwart BellSouth by AT&T, it still is among the national leaders.

One of the knocks on Atlanta in years past has been a scarcity of venture capital funding for start-ups and more mature companies. And, while Atlanta doesn’t have the critical mass of funders of a Silicon Valley, the numbers are growing and even out-of-towners are starting to take notice.

“The real issue is that private money is available,” explains Hartnett. “Whether its private equity or qualified angel investors, there is a lot of money in Atlanta and it’s just a matter of finding it. Those means of finding it are now starting to surface more than we’ve seen in the past.”

Events such as the Venture Atlanta forum attracts venture capitalists from around the country for presentations and networking with local tech firms and entrepreneurs.

The boom for venture capital came in 2000 when firms received more than $2.3 billion, but fell rapidly in the tech bust of 2001. Venture capital funding has increased in the last three years, and 2007’s total of $463 million represents more than a $100 million increase over the previous year.

Along with venture capital investments, Atlanta technology has experienced a growing wave of mergers and acquisitions. Georgia is the fourth busiest state in terms of valuation of companies sold over the last three years. High-tech mergers hit a record peak in 2006 with $7.3 billion in valuation, according to Thomson Financial. While activity has fallen since then, it remains well above past years.

Atlanta companies have also been tempting for big names seeking to flesh out their own portfolios. IBM recently bought a stake in Internet Security Systems, while Cisco Systems purchased Scientific Atlanta. Both companies have expanded local operations since then.

Over the years, many smaller tech firms haven’t waited for outsiders to give them the money they need to grow. Many have seemed to specialize in getting off the ground without relying on the big money boys.

Sean Murphy recalls how he and three partners started green computer consulting firm Canvas Systems.

“We used to work together at a computer leasing company and came up with all these great ideas and quite frankly the owner of the company didn’t like new ideas,” he explains. “So we started the company in a hotel room in 1998 on Peachtree Dunwoody Boulevard using our life savings to bootstrap the company.”

Today Canvas Systems has grown to a $120 million company, but the original philosophy remains the same.

“Our model is based on good ideas, young people with lots of energy and we’ve continued by hiring lots of college grads that come with great ideas, and we kind of stay out of their way,” Murphy says.
Relying on local talent who like living and working in Atlanta has helped boost the company to profitability.

And, when you ask where the tech companies are going, the answer is just about everywhere in the metro area. From Midtown Atlanta to Gwinnett County’s Technology Park to Cobb and Douglas Counties, companies are finding welcoming homes.

“You have pockets of critical mass all over,” Henderson says.

And, that speaks well of the strength of technology and the promise it offers as a prime driving force of Atlanta’s economic engine.