Getting The Lowdown on ‘Hidden’ High-Tech Entrepreneurs

They contribute to the success of startup and established companies. They account for a signifi-cant portion of the economy. And they are finally beginning to be recognized, especially in popular technology hubs, from California’s Silicon Valley to New England’s Pioneer Valley.

Operating out of homes or small-office settings with technology as their functional backbones, these micro businesses form a strong hidden economy, explains Amy Zuckerman, author of two important studies on the topic and a champion of Hidden Tech companies around the world.

In the Pioneer Valley, for example, the Regional Technology Corporation’s Hidden-Tech affinity group, which Zuckerman founded in 2002, quickly drew over 500 members. It has since grown into a net-work of more than 1,400 virtual companies across New England and the United States — even some global businesses check into its discussion lists.

“Hidden Tech was included in the Pioneer Valley’s economic Plan for Progress as a key element to boost and support over the next decade,” Zuckerman says, “because it was recognized that economic developers must build from within a region along with attracting outside business.”

Defining a revolution

But what, exactly, is a Hidden Tech company? There are, after all, thousands of home-based operations that can be counted as small businesses. What distinguishes a hidden techie from, say, a freelancer? Zuckerman says a Hidden Tech entrepreneur is one who is actively building a business, as opposed to the freelancer who takes on projects for pay or works on speculation. Though these operations are small, their clients can be regional, national or even global. And, by definition, Hidden Techs utilize advanced technologies to operate or conduct business. This can range from a laptop, a cell phone and a high-speed Internet connection to mini-servers and work stations. The most common businesses Hidden Techs engage in are software/hardware development, e-commerce retailing, web design and hosting services, management and organizational develop-ment consulting, content delivery, IT training and marketing. Another large contingent is involved in business management and in the arts, especially technology-based arts such as animation. Zuckerman herself is a Hidden Tech entrepreneur. As principal of A – Z International Associates, she provides international market research and informa-tion packaging.

Hidden Tech’s contributions

The need for a Hidden Techie can arise in myriad ways. For example, a small or startup company may want to add e-commerce or data management capa-bilities. That would require senior-level expertise. The company may not be able to afford to hire someone longterm — or even attract the caliber of candidate it would want to hire. Likewise, an established company may not have the staff avail-able to assign to a short-term project, such as a new-product launch.

Hidden Techs are ideal for such assignments because they bring the skill set required and they don’t require a longterm commitment.

A Hidden Tech business is often the “conduit” for spreading technology, says Paige Miller, Principal, MultiPlanet Marketing, Inc., Wayne, Pa. MultiPlanet provides marketing, advertising and public relations for technology firms — particularly, smaller technology companies.

“It takes a lot of work to stay current on technolo-gies and what they can do,” Miller says, “and most companies are too busy running their business and taking care of day-to-day problems to step back and take a larger view of things. When we go in and work with a company, we help them get a broader perspective on what they could be doing.”

Network of micro companies

Hidden Techs often rely on other Hidden Techs to fill in needed services, creating temporary “virtual” full-service companies.

“I believe that the single-person business is the hidden gem in the region’s economy,” says Andrea Michalek. “There are highly skilled, highly motivated individual contributors who can be leveraged on a project-by-project basis.”

Michalek’s background is in the information space and in building web services. Her consulting busi-ness, 1800CTO, is based in her Harleysville, Pa., home. “I help a lot of startups — usually two guys and a business plan — launch new online products and help them get up and going,” Michalek says. “I help them figure out how much it will cost to build it and put the team in place: the graphic designers, database people, technical writers, marketers, what-ever it takes to get it done. Then, once it’s up and going, I transition out and move to the next job.”

Such cooperative efforts are not uncommon. Zuckerman writes that the Hidden Techs in her studies report many instances of “working together as alliance partners, hiring each other as subcontrac-tors and generally boosting business for their companies.”

Roy Jones, for example, operates his consulting business, SDApp Tech, Inc., out of his home office in Lower Salford, Pa. With a mini-server and work stations, Jones provides solution-driven applied tech-nologies to small and medium-sized businesses that found him through word of mouth and networking.

For a number of engagements, Jones says, he has used other Hidden Techs for specific tasks, such as Visual Basic Programming, or for aspects of a proj-ect that may involve a longer term than he cares to get involved with.

The bottom line

Zuckerman’s research has shown that regions can leverage Hidden Techs, and by doing so boost the region’s economy through the revenue they generate and the purchases they make.

Evidence from the Greater Philadelphia region, though anecdotal, bears this out. Jones says one recent project led to the installation of about $400,000 in contracts and equipment, over and above his consulting fees.

And even a solo shop needs office supplies.

“My second home is Staples,” says Michalek. “It seems like I spend $200 whenever I go in there.”

Such expenditures can be multiplied by perhaps hundreds of Hidden Tech companies in the region.

Difficult to count heads

While corralling and counting its Hidden Tech base might be advantageous to a region’s economic devel-opment, it is virtually impossible to get an accurate count of virtual companies.

Zuckerman says she coined the term Hidden Tech because these businesses are hidden from sight and from government statisticians.

Pennsylvania’s Department of Labor bears this out. According to its statistics for 2001, over 600,000 businesses in Pennsylvania claimed “no employees” — that is, they were single-person operations. Collectively, they claimed receipts of $27.2 billion.

The “professional, scientific and technical services” category counted over 92,000 of those single-employee companies, with receipts of $3 billion. But this category includes a wide range of fields, such as legal, accounting, bookkeeping and payroll; architec-tural, engineering and specialized design; computer science; consulting; research and advertising; photog-raphy; translation and interpretation; and veterinary. The state doesn’t break out figures by field.

Can’t stop counting

Another hurdle in counting Hidden Tech companies is that the number keeps increasing due to many factors — among them corporate downsizing, baby boomer retirements from the traditional workforce and fallout from the dot-com bust.

Roy Jones, who started SDApp Tech after he retired from Unisys in 2001, counts himself among the boomers who’d had enough of the daily grind but wanted to continue working — on their own terms: “My objective is to keep myself appropriately busy, keep my mind occupied, keep learning and be appre-ciated,” he says.

Skip Shuda is a dot-com veteran, having started Destiny Software in the mid 90s and closed it in 2002. “We had a good run for about nine years,” he says, “Then we crashed on the dot-com beach.”

Today, Shuda utilizes his background in technology and technology management to operate a virtual company called Team and a Dream, which works with early-stage tech companies, typically entrepre-neurs or small teams of entrepreneurs. Its products include a competitive intelligence package powered by university interns, and an “Internet property devel-opment” package that helps new entrepreneurs cre-ate e-commerce businesses.

“I provide them with virtual management practices and packages to help them get off the ground,” Shuda says. “So I’m a virtual company helping other virtual companies.”

Bill Dimm was able to morph his company through the dot-com crash. Using proprietary software that he wrote, Dimm started Hot Neuron in 2000, offering a product called MagPortal.com — one of the Internet’s first magazine article search sites. Today, he’s transi-tioned MagPortal.com to provide websites with tar-geted news feeds that help motivate return visits. Hot Neuron’s clients range from startup companies launching new websites to a large, regional bank.

Operating out of his residence in Bryn Mawr, Dimm relies on a handful of telecommuters and freelancers — some local, some not — to provide the research he delivers to his clients. “They really don’t need to be located anywhere specific to do what they are doing,” says Dimm.

Home-based workers, many of whom were out-placed or quit their corporate jobs, provide a flexible network of professionals for Enable Consulting, a technology consulting business in Fort Washington, Pa. They interface directly with Enable’s clients, which range from startups to Fortune 500 companies, and provide everything from telesales and telemarketing to technology and consulting services.

Enable’s headquarters — half of a converted barn — includes office essentials, such as telephones, printers and desktops, while its infrastructure is outsourced to a data center in Seattle.

“We provide our flexible workers with a laptop or a desktop, and our ASP houses all of our applica-tions, so we can bring them online very quickly,” explains Managing Partner Joe Cellucci.

Academia tuned in

Further evidence of Hidden Tech’s increasing signif-icance can be found in academia. More and more colleges and universities are offering classes and programs in entrepreneurship.

Sixteen universities in Pennsylvania — including Temple, Lehigh and the Wharton School at Penn — are part of the Small Business Development Center (SBDC) program, which receives funding from the federal Small Business Administration and Pennsylvania’s Department of Community and Economic Development.

The SBDCs offer a combination of low-cost courses and free consulting to budding or existing entrepre-neurs. Each SBDC is supported by a core staff and outside experts who include former management consultants, venture capitalists, industry professionals and select members of the university faculty.

“We service about 600 to 700 clients a year,” says Tom Boland, client service manager at the Wharton SBDC. “My phone rings every single day. It never ceases to amaze me. We never run out of potential entrepreneurs in this town.”

At Penn State, an engineering entrepreneurship minor covers the fundamental skills needed for entrepreneurial, and intrapreneurial, success — such as finance, intellectual property management and marketing. While the program is open to all majors, more than half of the students enrolled are engineer- ing and information and science technology majors.

Some students are going on to start their own businesses right out of college, says Liz Kisenwether, Director of the Engineering Entrepreneurship minor and Assistant Professor, Engineering Design. Others go on to traditional jobs.

“In today’s world, even large corporations need to be more innovative,” says Kisenwether. “So we tell them, be a product-line leader or a new-product innovator, whether that’s as a small-company entre-preneur or as an ‘intrapreneur’ in a large company.”

A need to network

One thing Hidden Techs share is the need to network. Andrea Michalek founded an online forum for Hidden Techs in 2001 because she “couldn’t find a peer group.” Unit of 1 (www.unitof1.com) launched with a breakfast meeting that drew 17 people with just word-of-mouth publicity and two day’s notice, recalls Michalek. Now it has about 500 regional members, all of whom are professional-service providers. Today, Unit of 1 is sponsored by Villanova University, which provides space for the group’s regular meetings.

The need for networking is reiterated by Jones, who has joined Unit of 1 and other networking groups. “More than anything else,” he says, “it was to participate in the networking going on from the technology standpoint.”

Their mantra is clear

The mantra of the virtual company is clear: “We’re here, and we’re here to stay.”

So is the challenge: to organize the unorganized.

“Hidden Tech is a burgeoning part of our econo-my,” says Amy Zuckerman, “and there’s no end to the creativity and innovative spirit these folks embody. But you can’t organize, work with and leverage people if you don’t know who they are, where they are located and what their needs are. It takes a creative approach to economic develop-ment — a willingness to take the clusters inherent in any Hidden Tech population and boost them with whatever services and support they need. Then, watch them grow jobs for your region.”