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A SITE SELECTION INVESTMENT PROFILE
COLUMBUS, OHIO
From Site Selection magazine, May 2015
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Start Me Up

How Columbus acts like a magnet — and a greenhouse — for tech entrepreneurs.

COLUMBUS, OHIO
With more than 822,000 residents, Columbus is the largest city in Ohio and the 15th largest in the US.
Photo courtesy of Experience Columbus

by RON STARNER
T

he entrepreneurs who are building successful technology companies in the Columbus region of Central Ohio all say the same thing about the capital city: its potential is just now being harnessed.

From CoverMyMeds and Biosortia to Sage Sustainable Electronics and Updox, high-tech startups are proliferating and profiting in record numbers in Ohio’s largest city and surrounding towns like Dublin, New Albany, Lancaster and Gahanna.

The movers and shakers behind this new wave of momentum aren’t your typical corporate magnates, however. Increasingly, they are younger, highly educated professionals who received a home-grown education and chose to plant their roots firmly in the fertile soil of Buckeye land.

How these entrepreneurs rose to prominence, as well as the confluence of events that brought Columbus to this point, is a story of economic transformation that has been decades in the making.

Jeffrey Lyttle, senior vice president of JPMorgan Chase in Columbus, says the combination of young talent and a cost-effective location makes the Ohio capital one of the best launchpads for new industry and innovative startups.

“In 2014, The Ohio State University was the single largest source of undergraduate talent for Chase in the world,” says Lyttle, who is also a graduate of OSU. “This is a very competitive market now. Whether you are looking at the talent pipeline, real estate costs per square foot, Eastern Time Zone location, or accessibility to markets all across the country, Columbus has it all. When you factor in the quality of life — including educational and cultural amenities and sports and recreation — it makes it very easy for us to recruit talent to this market, because you can recruit the whole family.”

No one knows this any better than Matt Scantland, principal and co-founder of CoverMyMeds, a healthcare technology management firm that develops custom software to help physicians and pharmacists complete coverage determination forms for most drug plans.

“We wanted to be in a central location for our truck customers. That gave Columbus an edge. Being located in the state government capital was a positive factor too. It is important for us to establish ourselves where we would receive the greatest support.”
— Vance Zanardelli, division engineering manager, Parker Hannifin Hybrid Drive Systems

A home-grown Columbus entrepreneur, Scantland says that “Columbus is an ideal place to build a software company. People here have the skills needed in the healthcare IT business. We can get amazing people here, because we have the raw material needed to attract them.”

CoverMyMeds employs 180 people and occupies nearly 70,000 sq. ft. in one of Columbus’ most coveted addresses — 2 Miranova Place. Since 2008, CMM has retained 100 percent of its senior staff, notes Scantland, adding that the company is now doubling the size of its workforce each year.

The Columbus Way: Grow From Within

“We prefer to grow with our own employees,” says Scantland. “We secure top talent from OSU, Case Western Reserve University, Rochester Institute of Technology in New York, and our own development boot camps. Our retention rates are astounding, and Columbus Business First named us the Best Medium-Sized Employer in Columbus.”

The company is growing so fast, notes Scantland, that its vice president of engineering spends about 90 percent of his time recruiting and training employees.

“Columbus is right in the middle of a huge number of very large health organizations such as Cleveland Clinic, UPMC in Pittsburgh and The James Cancer Hospital in Columbus,” he says. “I grew up here and I went to OSU. I have watched all of my friends come back to Columbus. This is an ideal place for very ambitious new college grads.”

Columbus makes sense as a preferred business location for several reasons, Scantland notes. “The cost structures are good. It is a city that is very easy to live in. It is affordable, and lots of big customers are located here, thanks to this being a major headquarters city for insurance, financial services, retail and restaurants. Plus, the access to capital is very good here.”

Whether you need early-stage or late-stage capital, says Scantland, you can find it in Columbus. “With JumpStart in Cleveland and Drive Capital in Columbus, there is a fit for your need,” he adds. “The bottom line is that investors will listen to a company that has a great story in Columbus.”

Kurt Dieck, president and CEO of Biosortia in nearby Dublin, seconds that motion. A startup drug discovery company operating in the natural products sector, Biosortia was recently named Collaborator of the Year by Eli Lilly.

Parker Hannifin Hybrid Drive Systems employs 55 high-tech workers in Columbus. By capturing brake energy and reusing it for vehicle propulsion, commercial work trucks like the one pictured here can reduce their fuel consumption by 50 percent using Parker Hannifin technology.
Photo courtesy of Parker Hannifin Hybrid Drive Systems

“We like being located in Dublin,” says Dieck. “Over 100 emerging businesses are located here in the TechDEC (a technology-based entrepreneurial center in Dublin). The State of Ohio provided $1.5 million in debt financing, and our science team at OSU is a core part of our business.”

Biosortia employs 15 workers now and will grow to 30 by the end of this year, says Dieck. “We are going to have fewer than 10 customers, but they will be very large customers in the bio-pharma space. AstraZeneca found 48 hits for cancer drugs from our algae chemistry. We co-develop with big pharma, and on average, you get paid about $180 million per compound. Our model is extremely efficient.”

Dieck notes that “we are putting Central Ohio on the map for cancer research and drug development. We have the only technology that enables you to harvest parts per billion. After harvesting the algae from various bodies of water, we can give identifying chemistry that no one else has ever found before. Our technology and our people are our two secret sauces.”

One hears that a lot when talking with business leaders around the Columbus area. In fact, it’s a big reason why Parker Hannifin Corp. located its Hybrid Drive Systems Division in Columbus. The company revolutionized the work truck market by developing technology that enables a vehicle to capture brake energy and then reuse it to propel the vehicle. By using this technology, a commercial truck fleet can reduce its fuel consumption by 50 percent.

Tri-State Search Ends in Ohio

Vance Zanardelli, division engineering manager, says the company looked at the locations where it housed its technical people — Ohio, Michigan and Mississippi — before selecting Columbus to become the headquarters of the Hybrid Drive Systems Division in 2011.

“We wanted to be in a central location for our truck customers,” he says. “That gave Columbus an edge. Being located in the state government capital was a positive factor too. It is important for us to establish ourselves where we would receive the greatest support.”

Parker Hannifin, which is headquartered in Cleveland and employs 60,000 people worldwide, now employs 55 people in the Columbus-based division.

“We are developing the current and next-generation products in hybrid drive systems,” says Alyssa Peterson, division human resources manager. “We do a lot of product development, engineering and testing here. There are many sources of talent for us in Columbus. This division specifically relies on OSU and other local colleges and universities such as Columbus State Community College. We create a highly technical product, so we look for certain core competencies.”

Peterson notes that several factors make Columbus the right fit for Parker Hannifin. “The stabilizing influence of government and large private entities are a big plus in Columbus for expanding companies,” she says. “Midwest values are here. This is a safe and comfortable environment. If you are considering a Midwest location for your business, you really have to ask yourself, ‘What will be the foundation for you and your company in the future?’ You need an environment where you can attract and retain the kind of people you want, and that is exactly what we have found in Columbus.”

Even companies headquartered elsewhere, like Seattle’s Zulily, find this to be true. Maureen Shea, vice president of service operations for the e-commerce giant that sells more than $1 billion in products each year, primarily to moms, says that Zulily “has been very impressed with this location and the workforce. We have had a warehouse here in Columbus since the beginning of 2012, and we now have a corporate office here too. A great caliber of candidates and a large pipeline of retail talent is located here.”

The company announced last July that it would place 900 workers in a new call center in the Columbus area. The deal was made possible when the Ohio Tax Credit Authority approved a 75-percent, 12-year income tax credit for the firm. The credit is projected to save the company $6.2 million. Eventually, the site will have an annual payroll of $28 million, according to OTCA records.

“It has been terrific doing business in the Columbus area,” says Shea. “Most of our workers come from a retail background. There is a pace to retail that is quite different from other industries. We don’t have to educate our new employees on customer service. They instinctively get it. There is also a very strong work ethic here.”

Ambassadors for a Cause: Columbus, Ohio

Columbus Mayor Michael Coleman is now in his 16th year as the top elected official in his city.

To Columbus Mayor Michael Coleman and Columbus Crew SC Brand Ambassador Frankie Hejduk, the largest city in Ohio is more than a geographic location and a political capital. It is a cause.

Spend just five minutes with either outspoken leader, and you will quickly learn that their passion for the city is worn not just on their sleeves, but in their hearts, minds and words.

Now in his 16th year as mayor, Coleman has seen three presidents and four governors take the oath of office, but he says he’s never once relied on any of them to bail out Columbus.

“I don’t attach the success or failure of our city to any one of them,” he says. “Cities need to establish their own identities. Cities drive the success or failure of this country. They drive the economies of the state and the nation. I won’t put the destiny of my city into the hands of someone else. I put it in my own hands.”

For Mayor Coleman, that investment has paid handsome dividends for the City of Columbus. One of the fastest growing cities in the nation, Columbus has seen its population swell by 12 percent and its crime plummet by 24 percent under his tenure.

With 140,000 college students and 20,000 college graduates each year, Columbus annually is ranked as one of the top cities in the nation for millennials and one of the top cities for job seekers. Forbes recently ranked Columbus as the No. 1 Opportunity City in America.

It’s also been named the top city for working moms; ninth overall for STEM professional jobs; and a Top7 Intelligent Community in the World.

“Self-reliance is the key to long-term economic viability,” the mayor says. “We are a city of optimism, and I’ve seen it in our polling. There is an optimistic, can-do attitude in our city. We have what I call swagger. You might even call us ‘The City of Swagger.’”

Frankie Hejduk is brand ambassador for the Columbus Crew SC and one of the greatest players in the history of the Crew and the US Men’s National Team.

No one does swagger any better than Hejduk, a two-time World Cup soccer star for Team USA, two-time Major League Soccer champion (with the Columbus Crew and the Los Angeles Galaxy) and erstwhile California “surfer dude.”

While Coleman presides over the city as its chief executive officer, Hejduk promotes it like a one-man Twitter bandwagon. He’s seemingly everywhere at once in the city, and he’s never shy.

“I am from San Diego and I am a UCLA Bruin,” he says. “After my playing career was over, I could have gone back to San Diego, but I chose to remain here in Columbus because I truly love this city. There is a real sense of community and togetherness in Columbus. It is a very beautiful place, and I am super happy here.”

There is a reason why the U.S. National Team selects Columbus for every critical World Cup qualifying match, says Hejduk. “They know there is going to be a pro-American crowd here, and they know they will win here,” he says. “This is a young, vibrant, hip city with a passion for soccer and a zest for life. There are 55 breweries here. This is a cool, eclectic place where young people want to be.”

The mayor sees that youthful enthusiasm bleeding over into successful business ventures that now blanket the landscape. Columbus area startups like CoverMyMeds, Biosortia and Sage Sustainable Electronics are enjoying success well beyond the borders of Ohio, and they are doing it largely on the brainpower of the Columbus region’s talent pool.

“We have made a concerted effort to keep our young, talented people right here in Columbus, and they end up starting businesses and owning businesses in the region,” the mayor says. “This used to be a brain drain city; we are now a brain gain city. We have built an environment of fun culture, and you see it in places like the Arena District, the Short North and the German Village. We have chosen to engage the younger generation in the fabric of the city. As a result, tech companies and venture capital firms are popping up everywhere.”

Hejduk says he sees a lot of these faces at Crew games and around the city at his many brand-building stops. “I came here as an outsider, and this city embraced me as one of their own,” he says. “Now it’s my turn to give back.”

Fashion, Food Open New Doors

Columbus’ long history of producing successful retailers — from Victoria’s Secret and The Limited in women’s fashion to Wendy’s and Cameron Mitchell in restaurants — paved the way for an e-commerce upstart like Zulily to thrive in the area, Shea adds.

“It has been terrific doing business in the Columbus area. Most of our workers come from a retail background. There is a pace to retail that is quite different from other industries. We don’t have to educate our new employees on customer service. They instinctively get it. There is also a very strong work ethic here.”
— Maureen Shea, vice president of service operations, Zulily

“There is an abundance of large customer-focused corporations that are headquartered here,” she says. “They are totally focused on providing quality service. They know how to take care of their customers. So from a talent standpoint, Columbus is a great place to be. The original retailers set the tone and enabled us to come and grow here. It is tied to the fact that all of these companies are built around the theme of taking care of the people they serve.”

Columbus’ ace in the hole is its economic development team, says Shea. “Columbus 2020 is a very active and supportive organization focused on economic development in the region,” she adds. “They work to make sure that the people who grow up here stay here. There is a very strong partnership between Columbus 2020 and the businesses that are based here. I would advise anyone who is considering a Midwestern business location to reach out to Columbus 2020 and ask for help. They are very good at connecting you to the right developers and the right real estate folks. They will also make sure that you understand the population and the labor pool.”

Easton Town Center is a thriving mixed-use development that has become a retail mecca on the outskirts of Columbus.
Photo courtesy of Experience Columbus

Shea says the company will continue to expand in the Columbus market. “In Columbus, we will hit 900 corporate office positions in the next year and a half,” she says. “We are looking to continue to grow in this area and expand over the course of the next several years. Currently, we are spread out within Columbus and Gahanna. The plan is to eventually consolidate into a campus model. This has been a great place for us to put down roots, and we plan to keep growing right here in Columbus.”

Other firms tend to grow organically in Columbus. Robert Houghton, CEO of Sage Sustainable Electronics, says he found that Columbus provided everything his startup needed to grow.

A leader in recycling and prolonging the lifespan of electronic products, Sage employs 35 workers in Columbus and has plans to grow rapidly in Ohio, Baltimore and Reno, Nev.

“With the great universities that are here — schools like Ohio State, Otterbein, Ohio Wesleyan and others — Sage has access to a well-educated workforce,” says Houghton, who founded the company with his partner, Jill Vaske. “This is a very business-friendly community. The cost of living is modest, and the amenities are terrific. Our employees know this business inside and out, and they want to live here.”

Houghton notes that “there is the potential to double the size of this underserved market. We have the ability to serve any-sized customer in all 50 states. Within 72 hours, we can have a recovery team on site. We work with a lot of data centers.”

He adds that “we are a sustainability company with an environmental mission. We achieve our mission by providing financial results to our customers. We only hire people who care about our mission. We try to hire zealots.”

Judging from Houghton’s words and the comments of his fellow entrepreneurs in the Columbus area, zeal is not a quality in short supply.

Wexner Center for the Arts is part of a vibrant fine arts culture in and around Columbus.
Photo courtesy of Experience Columbus

This Investment Profile was prepared under the auspices of Columbus 2020. For more information on the Columbus Region, please contact Kenny McDonald at km@columbusregion.com or 614-225-6063.
On the Web, go to www.columbusregion.com.

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