Tech in the City

By Margarita Raycheva | Photography by Turner Photography Studio | Posted on 06.20.16 – Feature, Lifestyles, People & Places

With its picturesque countryside and charming Downtown, Frederick does not exactly come across as the next Silicon Valley. And yet Frederick County and the city in particular is cultivating a burgeoning industry—a growing community of businesses using advanced technology to bring innovation to the fields of telecommunications, web design and marketing, cyber security and software development.

The area now houses successful homegrown software and information technology service providers like Yakabod and Swift Systems, global industry leaders like Patriot Technologies, which last year made the Cybersecurity 500 list of the world’s hottest cyber security companies, as well as rapidly expanding ventures like Welocalize.com, which has offices in eight countries and offers software translation and localization services in 157 languages. And the tech movement is poised for more growth with the opening later this year of a high-tech business incubator in Downtown Frederick.

“We really expect [the incubator] to be a generator of the rising tide,” says Vaughn Thurman, a local entrepreneur and founder of two IT start-ups in Frederick—Swift Systems and Swift Software.

The cyber security start-up Fugue (formerly called Luminal) came to Frederick from West Virginia in 2014 and was named one of “10 Maryland Startups to Watch in 2016” by DC Inno.

And in March, Blue Pillar—an energy-management software company based in Indianapolis—opened an office at 2 N. Market St. in Frederick, following a $500,000 investment from the Maryland Venture Fund.

“We looked at multiple locations near Baltimore and Howard County,” says Jeff Pontius, Blue Pillar’s vice president for finance and operations. “We also looked heavily in Montgomery County.”  The company chose Frederick because it offers a unique combination of a lively downtown and easy access to international airports and government agencies, Pontius says.

The company was also excited about plans for a Downtown hotel and convention center, which would provide Frederick businesses with much needed space for conferences and client meetings. “It is a great location where people want to live and work,” he says. “It is a great place to bring clients.”

Other businesses are also starting to take notice of everything that Frederick has to offer.

Within the next few months, more high-tech companies will be joining the growing tech community Downtown, says Richard Griffin, director for economic development for the City of Frederick. More growth is expected with three other high-tech businesses considering potentially moving into the area. “It has been very gradual and over a long time, but there has definitely been a strong growth in that sector in the last five to eight years,” he says.

Suburban Competition

Bringing more tech businesses into the area has been an ongoing mission for city and county officials. Advanced technology businesses offer stable, high-paying jobs and can help generate more local opportunities for highly qualified professionals. “We have a very talented workforce,” Griffin says. “But as many as 40 percent of our workforce travels to work in other areas. Many of those people would prefer to work and play in Frederick.”

The information technology sector is among the highest paying industries in Frederick County, according to Sandy Wagerman, research and marketing specialist for the Frederick County Office of Economic Development. The average IT worker in Frederick makes a weekly wage of $1,278, which is 40 percent higher than the average weekly wage for all industry sectors in the area, Wagerman says.

But while the tech industry in the county is growing, it does not yet have the critical mass of businesses to rival the range of jobs and opportunities for IT professionals that exist in neighboring areas, such as Montgomery or Howard counties.

“The biggest thing that is holding us back is the workforce,” says Nick Damoulakis, who co-founded the IT web agency Orases in Frederick 10 years ago. “In today’s market, you are competing with companies across the world, so you are always looking for the best talent. … There are tons of people here that are very talented. They just don’t see Frederick as a viable place to work and live. The fact of the matter is that it is.”

Local business leaders and government officials are looking for new ways to make the area more technology-friendly and promote the rich business climate in Frederick County. One product of these efforts is Tech Frederick, a consortium of IT business owners established in 2009 to promote cooperation within the local technology business community.

Tech Frederick advertises local IT job openings, organizes networking events and last year started offering free classes in leadership and technical skills for those seeking to enter the IT industry, says Damoulakis, who serves on the group’s advisory committee.

Funded through a $150,000 grant from Maryland EARN, a state-funded initiative of the Department of Labor, Licensing and Regulation, the classes are especially geared toward candidates who are unemployed or underemployed because of outdated skills. Classes take place at Frederick Community College and fall under different industry tracks such as web design, system administration or business development. Topics for the classes are selected by local IT business leaders, based on what they believe has been missing from the resumes of their job applicants.

About 50 IT professionals have taken advantage of the classes, Damoulakis says, adding that the initiative has been so successful that the group will be applying for the state grant again this year.

Frederick County has also been stepping up its efforts to promote itself as a technology-friendly area. The Frederick County Office of Economic Development exhibited at the Tech Council of Maryland’s first Bio+Tech16 Conference this year that brought together more than 500 professionals working in the fields of life science and technology, the first event of its kind in the Mid-Atlantic region. Economic development officials are also planning to attend the Maryland Development Technology Corporation (TEDCO) annual Entrepreneur Expo in the fall, Wagerman says.

Downtown Incubator Crucial

The biggest game-changer for Frederick County’s high tech industry, however, will be the opening of a Downtown incubator that aims to provide education, resources and support for tech start-ups. The incubator is being established through collaboration of government and business organizations and will convert two vacant floors of a county-owned office building at 118 N. Market St. into a modern and collaborative space where IT entrepreneurs can grow creative ideas into viable businesses.

Supporters believe the incubator has the potential to usher massive changes for the local tech industry by bringing in new businesses, generating jobs and helping the area retain and attract qualified professionals to work in the field of advanced technology.

The Downtown Frederick Partnership in February secured a $15,500 grant from the Maryland Department of Housing and Community Development to help pay for a consultant to redesign and adapt the plain government office space into a new, more creative function, says Kara Norman, the partnership’s executive director. “It was a really competitive grant and we are really thrilled to get it,” Norman says. The county is expected to match the grant funding and Norman expects the building redesign to begin by mid-summer.

As in most incubators, entrepreneurs will likely pay a reduced fee to use the facility and its resources, she says. “Having that affordable space is great help for someone who is trying to grow their business. There is a great opportunity for saving.”

Vaughn Thurman, the founder of Swift Systems, who also serves on the board of directors for Frederick’s existing biotechnology incubator, believes there will be no lack of interest in the new incubator. “There are a lot more start-ups that are out there,” says Thurman. “We have local entrepreneurs who want to get their business started.”

With no technology-specific incubator in Frederick County, Thurman has seen a number of local entrepreneurs use the services at Montgomery County’s tech incubator to develop their ideas. That usually means that their businesses end up staying there, he says. “We want to put a stop to that.”

As part of the efforts to start the new incubator, organizers have reached out to Hood College and Frederick Community College to discuss ways to marry the newly-minted tech businesses with student interns, Thurman says. Like many others, Thurman believes that the incubator can mirror the success of Frederick’s biotech business incubator—the Frederick Innovative Technology Center, Inc., known as FITCI.

Since its creation in 2004, FITCI has helped local biotech businesses expand from 40 to more than 85, making Frederick one of the largest biotech industry clusters in the state of Maryland.

The new tech incubator should be able to do the same and more for Downtown, Thurman says. In addition to high-tech jobs and high-wage earners, the incubator should be able to bring business for Downtown shops and restaurants. “High-tech jobs pay anywhere from $70,000 to $200,000 a year,” he says. “Think of the expendable income that will be coming Downtown.”

Once they are ready to take off, the new businesses created through the incubator will need office space and can help fill up the second floors of Downtown’s historic buildings, which are perfectly suited for high-tech businesses, Thurman says. “There is a lot of unused or underused space in Frederick. We could have a real renaissance in Downtown Frederick.”

Expanding What’s Here

While city and county officials will continue their efforts in drawing new tech ventures into the area, they have been pleased to see businesses that are already here grow and expand. One success story has been 270net Technologies, a web design and digital marketing company, established in 2001, has recently expanded by moving to a new, bigger location on President’s Court and expects to hire 20 new employees.

Regent Education, a company that develops software to help colleges manage financial aid, has grown so much in recent years that it’s planning a major expansion. The business which employs 80 staff members and is currently located at the Firehouse Financial Center on West Church Street, will be moving to a bigger and newly renovated office space inside the Union Mills building on East Patrick Street. The 1889 building was once a hosiery factory and has been vacant for more than a decade. The building is now undergoing a multi-million-dollar renovation and will eventually provide Regent with much needed office space, says Steve Ellis, the company’s vice president for recruiting operations. “Ours have just been growing pains,” he says. “We’ve increased our employees by over 100 percent over the past three years.”

Smith Yewell, who started Welocalize.com in 1997 and moved the company from Old Town Alexandria, Va., to Frederick in 1999, says he was drawn not only by the affordable office space but also the character and unique atmosphere of Downtown Frederick. “We were looking for a vibrant community,” he says.

From the company’s office at the Glass Factory at 241 E. 4th St., Yewell has been able to grow his business into one of the world’s leading providers of innovative software translations and localization solutions. The company employs more than 600 staff members worldwide and maintains offices in the United Kingdom, Germany, Ireland, Italy, Romania, Japan and China.

Yewell recognizes the need for more skilled IT professionals in the area and says most of the software specialists who work at his company’s headquarters commute from the Washington and Baltimore areas. But over the 17 years he has run his business in Frederick, Yewell has seen the expansion of local tech industry scene and credits successful public-private partnerships for the positive changes. Looking at Frederick today, Yewell sees a city that has everything a modern, tech company may need—from a convenient location to great restaurants and entertainment.

“The infrastructure is already here,” he says. “It’s just a matter of getting the word out.”