‘Go time:’ Centre County entering a vibrant tech period

People in tech are dreamers.

They are also the developers who churn out cutting-edge feats the average person could only dream of.

There are thousands of them in Centre County. Some are professionals driving their business revenue up by the millions each year. Other are students honing their craft. A few are just kids teaching themselves how to program on their home computer.

People like Jeremy Frank, president and CEO of KCF Technologies, see purpose in what they do. His company launched in 2000, a year in which it was usually just him alone in a room. He now employs 32 people and plans to hire about 10 more in the next year.

“We call what we do giving machines a voice,” Frank said. “We use industrial wireless sensors to monitor machinery, which sends back data by vibration that predicts when machines will fail, saving them money and making us valuable enough to make money.”

Centre County’s tech companies rake in about $750 million in annual revenue, according to Videon-Central co-founder Todd Erdley.

His company led a community effort to figure out how much the tech community was worth in 2013.

That in part led to 3B33, a Chamber of Business and Industry of Centre County initiative supported by Penn State and local entrepreneurs to drive the county’s annual private-sector revenue to $3 billion by 2033.

“Right now in this (county) there are over 250 high-tech companies,” Erdley said. “They sell at a rate of three-quarters of a billion dollars per year. That’s a really big number — not big enough — but a really big number.”

He, along with other local tech entrepreneurs, support what they hope is a groundswell of continued growth for existing companies and those that are in the early stages.

But to understand where you are going you have to know where you came from — someone probably already said something obnoxiously cliche like that.

The past

Erdley founded Paragon Technology in 1992, and the company failed due to what he called corrupt investors.

“One day in late 1997 I got a phone call and found out that everything, all the money, had been stolen,” Erdley said. “That’s a bad day. I was being held financially responsible, and we tried to rescue the company, but ultimately we had to negotiate out our debt, auction our equipment.”

He turned his fortunes around in quick fashion with a $3,500 loan from his dad, a ticket to the West Coast and the ambition to knock on Silicon Valley doors.

“I told them if they gave me $5,000 in the next two weeks I’d guarantee them engineering service at a rate of $40 an hour for the next year,” he said. “We were really smart in this new thing called DVD, and that’s how Videon started. It was a way to rescue the people I had been working with. I was able to rekindle a company, and it was purely a rescue and a way to continue to work together.”

Erdley’s short-term downfall and subsequent turnaround struck about five years before the area lost thousands of manufacturing jobs.

About 500 people lost their jobs in 2004 when Murata Electronics North America closed its county facility. Another 200 were unemployed in 2008 due to Bolton Metal’s closing. About 1,000 jobs were cut in 2003 when Corning shuttered its plant.

The closures just kept coming.

Centre County wasn’t alone. Pennsylvania manufacturing employment declined by about 24 percent from 2001 to 2008, according to an American Manufacturing Trade Action Coalition report.

Still, the State College area suffered the most — nearly 47 percent of its manufacturing jobs were lost.

“One of the overall trends is there are several larger manufacturing companies that left or shrunk in the last 20 years in our community,” Frank said. “In that same time more companies have sprouted up, but they aren’t big yet.”

Ten years ago there also weren’t many tech companies getting off the ground in Centre County, according to Don McCandless and John Vidmar of Ben Franklin Technology Partners, which provides seed capital, business and technical assistance and new-product-development support for entrepreneurs.

“If we’re coming up with the number of companies and not the number of employees, there have to be more now,” Vidmar said “There are a lot more today in the $1 million to $5 million category. There have to be more, because there are simply many more people starting companies in the last few years. Before that there were relatively few.”

The TechCelerator program, they said, invested $6.4 million in 43 startup companies in the past four years.

“I think it’s an exciting time to be in technology,” McCandless said. “Penn State is embracing a new way with President (Eric) Barron’s initiatives (and) a lot more funding being applied to it. The community seems to be embracing startups and trying things, too.”

Vidmar and McCandless said it is typically easier and less expensive to launch a tech company in 2016 than it was 10 years ago. Funding, however, isn’t as readily available in Centre County as it is in the Silicon Valleys and Bostons of the country.

“It’s a great time to start and grow if you can take a risk,” Frank said. “It’s a great time for what you can do in terms of making products or software platforms. Tools have advanced so far and writing software is so much easier because of technological advances. That also means there’s much more competition in the market.”

Frank said when his company was founded at the turn of the century that there wasn’t a well-known tech and entrepreneurial community.

Erdley pointed to several fronts that have spurred local interest and investment in entrepreneurship.

A handful of business owners created a forum called the Centre Region Entrepreneur Network.

“We didn’t really know each other,” he said. “All we did was we came together to learn about each other, learning best practices and drinking a beer. It has grown to be maybe 75 companies representing easily over 1,000 people. It’s really a place for entrepreneurs to come together and learn.”

Erdley pointed to CBICC’s “transformational event” when Vern Squier became its president and CEO in 2011, calling him an anchor point for economic development.

He also noted Penn State, which changed intellectual property policies in 2011, and President Barron.

“Eric Barron comes in, and he preaches the entrepreneurial gospel,” Erdley said. “He’s working with (executive vice president and provost) Nick Jones, who is amazing in his understanding of economic development. He’s working with (vice presidents for research) Neil Sharkey and Hank Foley. They have been unbelievable in changing Penn State’s ideas as it applies to entrepreneurs. Old Main, Penn State is very very critical.”

The future

There are plenty of tech trends entrepreneurs could jump on.

Frank mentioned the Internet of Things, the network of objects implanted with software and sensors that enable the collection and exchange of data.

“It’s smartphone technology in everything, cars, trains, trucks, appliances,” he said. “You have oil and gas being extracted from the earth, but insert technology into it and do it more easily, safely and more cost effectively. The Internet of Things will have a broader impact on the economy, businesses and our daily lives.”

Erdley recently attended the 2016 Consumer Electronics Show in Las Vegas where thousands of companies were represented for four days.

Tech trends that he took away from CES included the ensuing mass transition of ultra high definition video, electronics in automotive manufacturing and the unbundling of the cable system — predicting that divorcing ESPN from cable would be a watershed moment for television.

Vidmar and McCandless said there are opportunities for technology in all industries — advancing health care, improving the delivery of education and data collection in social media.

The goal, for each of them and hundreds of other Centre County entrepreneurs and investors, is to scale the tech industry here.

The challenges that lie ahead depend new players stepping up, logistics and investment.

“In today’s global economy you don’t have to be located here to do things,” McCandless, who worked at Bellefonte’s Restek for 20 years, said. “The customers and partners we had at Restek, we could work with them all over the world and we did. You don’t have to be here because of technology.”

Community and business leaders have talked for years about retaining graduating students and young professionals. It’s possible, through the emergence of educational technology, some students won’t be here while earning their degrees.

Not everyone has to get a four-year education at a Penn State campus, Erdley said, due to Penn State World Campus, an online platform for courses.

“Penn State has the ability to scale just as many students online as on campus 20 years from now to make education affordable,” Erdley said. “It is very viable that students will not go to the campus for all four years, but maybe just the last two.”

He called it “go-time,” a critical point in Centre County’s private sector to grow its businesses and attract more entrepreneurs.

“There are real entities employing people in this town,” Erdley said. “There is this metamorphosis that’s happening to this town where we are going to reinvent ourselves from a technical standpoint. If we’re purposeful about this vision called 3B33, it will work.”

He hopes it’s not just a dream.

This story was originally published February 15, 2016 at 10:07 AM with the headline "‘Go time:’ Centre County entering a vibrant tech period."