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STRATEGY

Portland Plays Perception Poker
 

Can a thriving little city in Maine bluff its way into the ranks of big-time Internet players?
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A thriving little city in Maine tries to beat its small-time rep and bluff its way into the ranks of big-time Internet players. Is the promise of a more rural lifestyle, coupled with cool opportunities, enough to lure great talent?

Portland, Maine, is the rare American town that looks exactly the way you would expect it to; design a perfect coastal New England city, and you'll get Portland. There's an old-fashioned commercial district, all brick and wood with a splash of Victorian frill. The waterfront hosts a still-active fishing industry. Nineteenth-century mills and grand mansions abound, many of them now being converted into new work space, others serving to house enclaves of working artists and musicians. There's a hip, wired scene; a music scene; and so many transplants from New York, you can almost get the Sunday Times on Saturday night. Just beyond the inner harbor there are more than 300 islands, and not far inland there are lush evergreen forests. People who live in Portland love the community for its liveliness and cocoonlike, rugged warmth -- the perfect antidote to harsh Maine winters.

It's also way off the beaten career path, which must be why a guy like Rory Strunk has such a hard time getting anyone to move there.

True, everyone's having a tough time getting good workers these days. Luckily, Strunk has a big advantage. He's got a hot company -- his Resort Sports Network feeds information about weather, trail conditions, and more to resort cable stations, its own Web site, and (most recently) CNN Headline News -- and it's attracting a lot of attention for the way it's blending Web and TV distribution.

Not exactly what you'd expect from a company with a view of Portland Harbor. Fishing boats piled high with lobster traps sit docked just beneath Strunk's window. It's picturesque, but it's not exactly Tribeca.

That dichotomy presents as-yet unanswered questions for Strunk's company and for other growing Portland businesses: Does the provincial reputation of rustic Maine amount to an insurmountable psychological barrier for recruits now living in Atlanta, New York, or Palo Alto? Or can the beauty of coastal northern New England and its more relaxed lifestyle (along with a first-rate electronic infrastructure) be the lure? Can Portland hook the talent it needs to join the ranks of the San Franciscos of this new world?


When John Coleman won the account, his competitors called his people clam diggers, but he got the last laugh.


Less than two hours by car from Boston, Portland is caught between its old-timey charms and its aspirations toward sophistication. Local CEOs and other image makers both embrace and distance themselves from the city's long-standing reputation for quaintness -- the lobster rolls and lighthouse watercolors, the renovated Old Port neighborhood with its art galleries, chichi shops, and yupscale cafÉs. Portland's old Yankee charm brings a lot of money into the city: out-of-state vacationers drop their dollars in the downtown while on their way to summer homes or outlet shopping in L.L. Bean country. Last summer 17 cruise ships docked in the harbor, and this summer 50 are expected to drop anchor.

Ideally, the city wants to be known as being "so far from and yet so close to" the rest of the world, an insulated yet accessible retreat. "It takes less time to drive from Portland to Boston than it does from San Jose to San Francisco," says John Coleman, president of VIA Inc., a Portland-based marketing company. "People view San Francisco and San Jose as being in the same area, as part of a corridor. We have to get people to see Portland, Portsmouth, N.H., and Boston as part of a New England tech corridor."

But the corridor between Boston and Portland is quite different from the one between the two California cities. Instead of connecting pockets of technology and culture, such as Palo Alto, Stanford, Los Altos, and Mountain View, the drive from Boston to Portland features 110 miles of forest. The most significant pocket of culture is the New Hampshire State Liquor Store located at the halfway point.

It's a drive that can be good for the soul, but it does make you feel as if you've stepped off the grid. When you cross into Portland, driving past longtime local hangout Gritty McDuff's BrewPub and gliding onto the quiet main drag of Commercial Street, there's little to signal that you've returned to city life. Mostly what you see are fishing boats and seagulls and (in the wintertime) thick down jackets and Bean boots. There are few suits and fewer cell phones, and there's not a lot of attitude. It can take a while before you realize that this is not just a whistle-stop but a mini-boomtown on the new economic frontier.

At the heart of Portland's newfound vitality are businesses like VIA, Coleman's 100-employee, $8.8-million company. Housed in a very hip renovated molasses factory, VIA is one of four Maine operations that made the 1999 Inc. 500. (Yankees are not like the people in, say, Dallas; they never throw anything away, including their buildings. That gives Portland an abundance of old mill space, which can be easily transformed into creative offices.)

Cool space notwithstanding, Coleman has seen his company's image stung by the perception bee. For a 1995 trip to California to pitch National Semiconductor for its marketing and Web-site business, Coleman brought one colleague. A prominent West Coast competitor showed up with a team of eight. When his competitors realized a company from Maine was in the house, "they all started laughing, saying, 'They must be clam diggers,' " Coleman says. He now tells the story comfortably, however, because his little crew of clammers won the account.

Even in Boston, Portland gets a backwater rap: It's basically part of Canada, right? "The Boston perspective still is, 'Can I fly there?' " says Colleen Coxe, an exec with the Portland PR agency Hauptman & Partners Communications.

"I thought it would be like Anchorage," concedes Patricia Garey, who launched a Portland office of her North Carolina company, eMedia Staffing, after her husband was transferred to the region.

Portland people do not subscribe to an insanely obsessive work culture, and for that the town both wins and loses points. "I recently met a classic 26-year-old, New York Silicon Alley guy, the kind who sleeps on a couch at work a lot," says Coxe. "I was telling him about Maine, and he asked, 'Do you really think people there can work as hard as they can in New York?' I said yes; but remember, people live 10 minutes from home here, so they have productive, whole lives, too. For now, it's easier to balance that here. He was unconvinced -- but that was fine with me, because I don't need to see him at the supermarket."

None of this would be that big a deal if the city weren't undergoing a new-economy transformation, the kind of boomlet that feeds on young, tech-rich talent -- a bunch of couch-sleepers, no doubt. Business-to-business support services, including telemarketing and credit-card management, has become the fastest-growing industry in the state. The trend is led by such companies as EnvisioNet Computer Services Inc., of Brunswick, which provides tech support and customer service to companies like Prodigy Communications and Microsoft; Wright Express, in South Portland, which recently took on Avis Rent a Car's commercial MasterCard program; and MBNA, a credit-card-service company.

There are also 1,500 Internet-related companies in the state, double the number there were two years ago. Forty percent are based in or near Portland. In addition to Resort Sports Network, superstars include Gofish.com, a buying-and-selling Web site for fish traders, and BroadcastAmerica.com, which transmits radio and news channels online, including Dick Clark's United Stations Radio Networks.

That's a good thing, because Maine's traditional industrial base has been eroding for years. And Portland's one-time largest employer, disability insurer Unum, merged last year with a Tennessee-based company and is expected to drop 1,500 of its 3,800 Maine-based positions. But despite deep cuts in paper, pulp, and leather manufacturing, the state has seen a net increase of 65,000 jobs since 1995. Credit is due in large part to the growing crop of Internet and Internet-support businesses.


If there was any one event that helped put Portland on the digital map, it was having been chosen as a pilot site for new high-speed Internet access.


For Portland to nurture this expansion, it has to craft an image of itself as a tech center. The hard part will be getting those 26-year-old wunderkinder setting off for Silicon Alley to head north instead. Portland may need to pull a Seattle-East move, stitching a variation on high tech and fishing and coffee and punk rock and rain together into an economic crazy quilt.

None of that is impossible. Portland is a comeback champ, having already engineered one renaissance back in the early 1980s. Restoration of the Old Port commercial district began in 1982, thanks partly to "a national awareness that you need to preserve historical buildings rather than plow them down for skyscrapers and parking lots," as longtime local businessman Michael Mastronardi remembers. Real estate boomed, tourists and new residents showed up, and the city thrived. Then, in 1987, a change in the tax laws and a reduction in monies for historic renovation put an abrupt halt to the surge, and the city's momentum slowed just as the national recession hit in 1991. "We didn't make much progress out of that setback until the last three years," says Mastronardi.

In the 1990s, even though Portland was still a place where people wanted to live, there was no economic growth. There were few professional creative jobs there, a function of the city's true remoteness. Many professionals moving to Portland had to bring their own work with them if they expected to make a living.

Then everything changed. If there was one event that can be said to have catalyzed the new reality, it was when Time Warner/Media One installed its pilot Road Runner cable lines for high-speed Internet access in 1997. Only 10 markets were chosen for the rollout. One was Portland.

"Portland was always used as a test market by companies like Procter and Gamble because its media were insular," says Jim Hauptman, founder of Hauptman & Partners -- and a Connecticut native who arrived in Portland in 1988, during the last boom. "Time Warner looked at the markets they had and the cable penetration here, which was high on a per capita basis. They made the city one of their test markets, and it was really well received." (Portland is still a guinea-pig town: an online music company, Listen.com, is currently testing a system for delivering whole albums over the Internet in just two markets -- San Diego and Portland.)

The new cable lines positioned Portland on the forefront of the digital economy, giving its businesses and citizens Internet access at the same lightning speeds as those available to their more cosmopolitan counterparts in New York and California. "Before Road Runner, it would take half an hour to upload the changes I was making to a site," says Joe Charlton, founder of Portland Web-development company Mystyc New Media. "Now I can do that in less than 30 seconds. You can see how that can increase your productivity; bandwidth is it."

Charlton is one Portland entrepreneur who was raised and educated in this city. He started his company three years ago, moonlighting after his day job at Systems Engineering. Mystyc has introduced more than 300 businesses to the Web -- high-end cabinetmaker Thomas Moser, the home-based dog-collar manufacturer MrsBones.com, and handyman franchisor Rent-a-Husband.com, to name a few -- and 98% of its customers are based in greater Portland. "It's unbelievable how rapidly the tech community is gearing up here," he says. "A year and a half, two years ago, it was easy to say nobody gets it. Today you can say that maybe people do get it."


Gofish.com is building colorful new space, but the views make it. Employees gaze on Casco Bay, the downtown, and the mountains in distant New Hampshire.


"Colors stimulate the resource centers in your brain," Liam Somers is explaining. Director of operations and current ad hoc color consultant for Gofish.com, Somers is showing off the burnt orange, custard yellow, light bluish gray, brighter bluish gray, and sea green walls of the office space the company will move into in four weeks. The space will be, he claims, "the premier dot-com office in Portland."

"The tech department will get calming colors," he says, while central gathering spaces will be done in "energizing" orange. High-energy CEO Neal Workman will be offset by the more mellow blue, while the money guys will be surrounded by green.

Using more than 50,000 feet of cabling to wire two floors (all company applications are Web-based, which makes the business highly dependent on its T1 lines), the new office will accommodate 150 employees -- up from 90 at the company's former Portland headquarters. Somers is splurging on the dÉcor and $900 ergonomic chairs. Window offices will be enclosed mostly in glass, so that everyone will have a view of Casco Bay, the Back Cove inlet, the downtown, and, on a clear day, the Presidential Mountain Range way off in New Hampshire.

Gofish.com is intent on winning the title of leader of the Portland business community for the new millennium. It has raised almost $42 million in the last six months -- from such sources as GE Equity, CMGI@Ventures, and Bedrock Capital Partners. Somers hopes to use a little of that money to leave a palpable mark on the city. "My dream is that when our new building [eventually] goes up for sale, we will be able to get it named the Gofish building," he says. "I want to put a massive fish on the roof."

Everyone in Portland seems to know everyone else. This is one of the great things about small cities and towns. Either people are in business together or have relatives or good friends who work at companies that they do business with, or they share financiers or marketers, or meet someone at the Standard Baking Co. who knows another person they ran into last week. "When my husband and I moved here, we realized that instead of six degrees of separation, it's two here," says Hauptman's Colleen Coxe.

So when there's a benchmark event like the opening of the Old Port Technology Center (OPTC), everybody has an opinion to share about the way it affects the city's current renaissance. The OPTC is a two-year-old high-tech incubator with a prime location smack in the middle of the Old Port. It serves as the hub of a high-tech business district of software companies and marketing businesses. The center sponsors seminars and summertime parties on its balcony overlooking the downtown's brick sidewalks. Strains of Good, the CD by the Boston band Morphine, float through the open two-story facility, making OPTC seem bright and sunny and a far cry from the ghettoized climate of incubators in office parks.

Michael Mastronardi, one of the center's cofounders, remembers that as recently as the summer of 1998, the concept of building a tech hub downtown just seemed weird. "We're in the heart of the traditional business community, and traditional Mainers were scratching their heads, saying, 'I don't get it.' They were baffled," he says.

But once launched, the facility took off. "Somebody finally said, 'We're here,' and the community rallied to support us," Mastronardi says. He has since been asked to develop tech centers in the White Mountains region of New Hampshire, in Portsmouth, N.H., and in Burlington, Vt., but he's not interested. "We're not into real estate; our role is to be passionate advocates for the new tech companies that are here."

Portland's wired community gathers at new venues like the JavaNet CafÉ. With its four blueberry iMacs (rent an hour of Web surfing for $6; $4 if you bring your own machine), well-worn couches and easy chairs, and 12-foot-high stamped-tin ceilings, the cafÉ is an informal office-away-from-the-office for tech types. "JavaNet is about the closest thing we have to a deal-making hangout," says Larry Burningham, whose Transit ID office in OPTC is about 40 feet from the cafÉ's back porch. One recent afternoon, cafÉ conversation centered on the merger of Fresh Samantha, an Inc. 500 juice company in Maine, with California-based Odwalla. The big question was what a move to California by the owners would mean to operations in Saco, Maine, just 20 minutes south of Portland.

JavaNet is just one of the venues for the networking that goes on now. City entrepreneurs also get together at monthly "Eggs and Issues" breakfast seminars put on by the chamber of commerce. (Maine's governor spoke one month, Rory Strunk the next.) Some have formed Web Port, an organization that seeks to educate the community on Internet issues. "I sit on the board along with two competitors," says Web designer Charlton.

"There's so much business here that everyone supports each other," adds Burningham.

It's not just dot-coms that are making Portland cook. Businesses like Local 188, a cafÉ on the edge of the downtown, are also fueling the development of the local networking scene. This combination art gallery and restaurant exhibits new artists' work and offers sophisticated fare with wine that's served in juice glasses. With issues of DoubleTalk magazine at the bar, the clientele is skewed toward artists, like those from the stock-photo agency upstairs, and Internet workers. (The agency is called Aurora & Quanta Productions and was relocated to Portland by National Geographic photographer JosÉ Azel after he visited the city for a photo shoot.)

Before moving to Portland, Local 188 co-owner Jay Villani lived all over New York City, making art while working as a cook to pay the bills. But he got tired of hour-long commutes on dirty subway lines and moved to Portland on something of a whim. He and his wife, co-owner Allison Villani, ran the Pleasant Street Collective gallery in Portland before opening in their current location last year. "The cafÉ is the hook that gets people to feel more comfortable coming into a gallery," says Jay. "But the gallery makes enough money to carry its own weight, too. The point was to have a space for getting local artwork exposed."


As recently as the summer of 1998, the idea of building a tech hub in downtown Portland just seemed weird.


Governor Angus King, an independent who came to office in 1995, is something of a technology stud who plays it smart with new business leaders. Before heading out on a trade mission to Asia last January, he had VIA's Coleman put together a "New Economy Brainstorming Session." Participants included 3Com Corp. founder and Maine resident Bob Metcalfe, former Apple CEO and part-time Maine resident John Sculley, and some of the newer local players.

"What emerged is that we have to battle this perception that Maine is a tough place to do business, when really it's a great place, especially for companies that are E-service enablers," says Coleman.

Last fall, at the Camden Technology Conference, Maine's annual economics-issues seminar, the governor was asked, "What is your policy on the government and Internet culture?"

"Here's my policy," he replied. Then he stood there, not saying a word. Slowly, attendees began to clap, the applause building into a roar. Wired News headlined its coverage of the event "Angus for Prez," reporting that "Net guru John Perry Barlow said he thought he was having a hallucinatory experience, because it was the first time he heard 'an elected official who actually got it.' "

Despite the government's laissez-faire stance on Internet regulation, it's still tough to get outside capital into Maine. In February, at a mansion-turned-old-money-hangout called the Cumberland Club, Portland held its first seminar on venture capital for Internet businesses. Hosted by Capitalvenue, a New Hampshire company that usually runs its seminars in Boston, the conference offered entrepreneurs the standard presentation and cocktail party but added one-on-one sessions with the VCs in attendance. Most of the venture people seemed receptive and enthusiastic, although one Boston money guy, when asked why he'd driven up, was bemused. "I have no idea," he said, smirking. "You tell me what's going on here."

Financiers often pressure their Portland companies to move, concerned that the remote location makes recruiting the bodies that fast-growth companies need too difficult. Strunk out and out rejected venture-capital term sheets that tried to force him to move. "San Francisco is stimulating, but we'd be a small fish in a big pond," he says. "Here we're a somewhat bigger fish in a relatively small pond. And there aren't a bunch of killer-app companies down the block offering stock options and making us a revolving door."

But when the most prominent school in the city is the Maine College of Art, high-end tech talent has to be almost entirely imported. That's definitely a concern. And a relatively small population (63,000 in the city itself, 232,000 in the metro area) means a small local labor pool. "We seriously considered opening a technology-development office in Cambridge, [Mass.,]" says David Weatherbie, chief operating officer of Gofish.com. "We gave the green light for that if we couldn't get people to Portland, but we were able to relocate three key people here."


"We have to battle this perception that Maine is a tough place to do business. Really it's a great place."

--John Coleman, president of marketing company VIA Inc.

Some companies, succumbing to fears of not being able to find talent fast enough to compete in Internet space, do move out. But for companies not looking for jetloads of top-echelon tech-development talent, the city has distinct operational benefits. "The advantage of being at this end of the corridor is that there are a lot of high-quality customer-service people here who have been trained by L.L. Bean," says VIA's Coleman. And office space is far cheaper; $12 a square foot is typical, compared with $40 or more in Boston. Don't even think about Palo Alto.

Besides, for every worker a relocated Portland company could attract, it would lose a lot of people who wouldn't relocate because they love Portland so much. There are three varieties of such residents: those who grew up in the area and created opportunities for themselves; those who moved there for the lifestyle first and then found work to sustain themselves; and, increasingly, those who left once and have now returned (or who are being recruited to the area now that opportunities are flourishing).

Maria Chambers is a Portland lover of the second variety. She left Silicon Valley for Portland as a lifestyle choice, started her E-business-strategy company, Propel, there and then joined John Coleman's VIA. Coleman himself, who grew up in Augusta, Maine, is a returnee. He worked at Portland's International Paper, moved to the Midwest for work, and came back to Maine in the late '80s. "There were limited opportunities here, so I designed a job that would let me work with companies in New York and Silicon Valley," he says. (That his California customers thought he was actually in Portland, Oreg., helped some.)

Gofish.com operations director Liam Somers, also a returnee, grew up in Maine, lived in New Jersey for six years, and then moved back. "I can see the stars here, swim in the water, drink the water without growing a third arm. I can walk down the street at midnight."

If you live and work in Portland, you can even kayak to work, as Phil Friedman, a developer at Terralink Software Systems, does from Peaks Island across the bay when there's enough daylight. Or you can start out as an artist and remake yourself into an equally creative businessperson, as Jay and Allison Villani have done in opening Local 188, and as Leslie Hamren, who started out in advertising and now owns and runs a candle shop, Portobello, in the Old Port, has done as well.

Ironically, as Portland attempts to thrive in a changing world, its biggest advantage may end up being what doesn't change: good living, strong community, and the beauty of the land -- and a dry humor peculiar to survivors of brutal winters. As they say in Maine, it's the way life should be.

Leslie Brokaw is a freelance writer and editor based in Boston.


Please e-mail your comments to editors@inc.com.

Last updated: May 15, 2000




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