Baltimore, a mini Silicon Valley?

Posted: 7:12 am Thu, March 5, 2009
By Richard Simon
Daily Record Webmaster

As Scott Ferber looks over his spacious office at the back of a nondescript Fells Point warehouse, he reflects about how it all started.

Ferber, an Owings Mills native, launched little-known TeknoSurf.com with his younger brother, John, out of a townhouse off of Burke Avenue in Towson in 1998.

The online advertising company — a revolutionary idea at the time — soon grew to 15 employees and, one year later, moved to the Inner Harbor with more than 75 full-time employees under the name Advertising.com.

“I love the underdog challenge,” said Ferber. “I’m not one to sit idly by.”

In 2004, the Ferbers sold their company to AOL for $500 million, and Scott Ferber took a $72 million buyout.

Ferber, 39, now runs TidalTV, a free online television network he started in May 2007. The company, which has 35 full-time employees, recently received $15 million in venture capital funding. It offers more than 35 specialty channels that many standard cable television networks don’t offer, such as National Geographic, Vogue TV, Cartoon Classics and Classic College Sports. Ferber has also gotten involved with a handful of other Web ventures, including setting up a third-party online video advertising network under the TidalTV name.

His meteoric rise from a dreaming entrepreneur to a highly respected individual in the technology world is emblematic of what some say the Baltimore technology community in East Baltimore is slowly becoming — a mini-Silicon Valley.

Silicon Valley, in Palo Alto, Calif., garnered attention worldwide as
early as the 1960s for its influence on computer operations and established its prominence before the turn of the century as the center of the dot-com world.

According to a 2008 report from the American Electronics Association, San Jose/Silicon Valley led the nation in concentration of high-tech workers, with 286 high-tech workers per 1,000 private sector workers in 2006.

In comparison, Baltimore high-tech firms employed 69 high-tech workers per every 1,000 private sector workers, 23rd in the country.

Baltimore harbors a technologically savvy and financially driven student pool, as evidenced by a 2008 Milken Institute study that placed Maryland first in the nation for human capital investment. With students coming out of colleges such as Johns Hopkins University, University of Maryland, Baltimore County, and schools in Washington and Philadelphia — many of whom are hoping to become the next Mark Zuckerberg of Facebook — Baltimore has become an enticing place to create a startup or join an existing tech company.

“We have an accelerating rate of technology enterprises in our region … and it’s putting us on the map,” Ferber said. “There is so much technological property and capacity here. I need a supply of capable talent at a reasonable price. Make that your criteria and Baltimore scores really high for this type of a business.”

The majority of Ferber’s TidalTV staff attended area universities and are originally from the area in between Southern Pennsylvania and Northern Virginia.

George Capalbo, vice president of Backbone Networks, a company that produces multimedia software and services for Internet radio, regularly visits the Baltimore area from his hometown of Boston to meet with clients from companies and area colleges such as Towson University and Goucher College.

Capalbo, who has worked with Apple to create Internet radio players on appliances like the iPhone, said the combination of cheaper rent and an increasing talent pool from area schools has contributed to the growth.

“If you’ve got cheaper rent in Baltimore and you’re developing the talent, that’s going to be a draw,” he said.

Baltimore has made strides over the last decade in attracting this pool of talent by creating an environment conducive for technology companies, most notably in the creation of the Emerging Technology Centers, which has become the technology hub of Baltimore.

Located in a 48,900-square-foot building in Canton, with a secondary facility on East 33rd Street, the ETC serves as an incubator for Baltimore-based technology entrepreneurs. Supported this fiscal year with $470,000 from the Baltimore Development Corp., the ETC-Canton is 100 percent occupied with 27 companies.

One of the advantages of working in the space is not only subsidized office rent but the strong sense of community among the companies.

Unlike some technology incubators that lose entrepreneurs who want to move to other cities, 98 percent of companies that graduate from Baltimore’s ETC remain in Maryland and 58 percent remain in Baltimore, according to statistics provided by the ETC.

“One of the beauties of coming into the ETC is that there are so many partnerships that get created here. Whereas you could get lost in the crowd in New York City, you will be central to the crowd in Baltimore,” said Ann Lansinger, president of the ETC.

In one of the ETC’s smaller offices, 19-year-old Dan Schepleng, CEO of 4 Ten Technologies, is working diligently at his desk, preparing for the upcoming release of his company’s latest software project that helps companies design Web sites.

Schepleng, a Pasadena native, moved into the ETC in September and is dreaming big the way Ferber once did, spending late nights and weekends in the office with a highly trained four-person staff.

Schepleng started working out of his basement when he was still at Chesapeake High School. After he graduated, he moved to an office in Severna Park. When Schepleng was ready to expand, he knew immediately where he wanted to be.

“Who needs Silicon Valley when you have Baltimore?” Schepleng asked. “It’s easier to stand out in a crowd here. I think if we were in Silicon Valley, there would be 20 of us; here there are only a handful of us.”

One of Schepleng’s employees, Po-Tsun Chen, attended Penn State University and George Washington University for his undergraduate and master’s degrees, respectively.

Chen, a Web programmer, drives close to three hours every day to and from 4 Ten’s office from his home in Arlington, Va.

Chen, 25, said that he believes in 4 Ten’s potential for growth, and working in Baltimore among a large pool of entrepreneurs with similar aspirations makes the long commute well worth it.

“It’s kind of like a mini-Silicon Valley with all of the technology coming out,” Chen said.

Despite the struggling economy, the Greater Baltimore Technology Council, which serves as a networking tool for area tech companies, has seen a 25 to 30 percent increase in the number of new members since the fall, according to Steve Kozak, executive director of the tech council.

Kozak attributes this increase to an elevated desire from companies that want a larger amount of exposure and the opportunity to meet other companies.

He has also observed an increase in the number of tech startups because of the escalating number of layoffs statewide. Talented individuals who have been recently laid off are looking to use their skills to launch innovative ventures, Kozak said.

“My guess is that we’re going to look back three years from now and there are going to be a bunch of companies that were created today that were generated as a result of a layoff,” he said.

One company that has experienced growth is Millennial Media, a leader in the mobile advertising world, led by Paul Palmieri, formerly in upper management of Advertising.com.

Palmieri said his company, which employs 48 full time and is located in the building adjacent to the ETC-Canton, grew by 25 percent from the third to fourth quarter in 2008. Palmieri attributed part of the company’s success to the steady growth of the mobile advertising market amid contraction in the overall advertising market. But he added that a lot has to be said for the potential growth a startup can achieve in the Baltimore market.

“I think with a smaller community here in Baltimore it’s easier to become known,” said Palmieri, a New Jersey native who launched Millennial Media in 2006 out of ETC-Canton. “It is a great place to have a technology company on the East Coast.”

Unlike Silicon Valley startups, which face more competition as they fight over the cream of the crop coming out of schools such as Stanford University and University of California, there is less of a battle in Baltimore.

“What you have is a little bit of a perfect storm where there’s great talent to choose from, and since the competition for that talent is a little bit less here in Baltimore, it ends up to be a more economically viable way to start a startup company,” said Palmieri.

Talking over the phone on a train heading from Baltimore to TidalTV’s sales office in New York City, Ferber said he is amazed at how much the Baltimore technology community has grown since he started little-known TeknoSurf.

“We are building and developing more commercial applications, technology oriented applications for commercial purposes, government purposes and education purposes, I feel like, today than we ever had in the past,” he said.

“There’s no doubt that there’s a lot more activity today than there was 10 years ago in this digital space. This neighborhood has been literally transformed.”