Entrepreneur Chip Pearson has been trying to get the word out that our region’s startup technology sector is a lot bigger — and has created a lot more wealth — than most people probably realize.
As a guy who still lives a short walk from where he went to high school in St. Paul, this misperception matters to him, too. It pains him to see talented young people decide better opportunities must lie out of state. And while he doesn’t quite come out and say it, he seems bugged they may take jobs at companies like U.S. Bancorp or Target, too.
He knows success in technology startups will breed more success, as a technology industry cluster gathers momentum, driving regional economic growth.
He makes a convincing case.
Pearson is such a warm and gracious coffee shop guest that it was easy to forget that he began a recent conversation with a gentle complaint. Even some of the media attention entrepreneurs get seems to completely miss the business value creation story, he said, instead likely reporting all about the varieties of craft beer in the office fridge.
“There’s been a lot of, ‘Isn’t it cute what the kids are doing in their clubhouse, with their pool tables and their beer?’ ” he said.
Pearson actually is one of the region’s best known entrepreneurs of recent years, as co-founder of Minneapolis software firm Jamf. The ironic part of his pitch about an underappreciated sector is when he explains how badly even he underestimated the amount of wealth that’s been realized.
After a board meeting this summer at a Minneapolis company called When I Work Inc., he said he began chatting with the company’s Vice President of Finance Greg Wallace about the last 10 years of successful “exits,” meaning the sale of a company when the founders and other owners get cashed out.
“I was way off in thinking it was about $1 billion,” Pearson said, as Wallace informed him it was at least several billion dollars of total sale proceeds.
Wallace later refreshed his research and compared notes with Jeff Sellner, leader of accounting firm CliftonLarsonAllen’s technology practice. Their combined list had more than $7 billion in sale proceeds in the past 10 years, from the closed sale of a little over two dozen software and other technology companies.
As Sellner pointed out: “There’s just a lot of companies flying under the radar. Even when some of these have sizable events, sales in the couple hundred million dollar range, they don’t hit the headlines. I suspect this list should be substantially longer.”
Even the very presence here of a company like When I Work seems to Pearson like an underappreciated fact. This provider of software for employers and hourly workers is about seven years old, yet has a payroll of about 130 employees.
“Outside of the Twin Cities they are seen as kind of a big deal,” Pearson said.
Part of Pearson’s challenge in getting more attention for technology startups, including from job candidates, stems from the success our region has had developing and keeping its constellation of corporate headquarters. As Pearson put it, “the Twin Cities is a company town, of many different companies.”
He sees the impact of those companies in data about technology talent, from lists such as one produced by the real estate firm CBRE. The Twin Cities region seems to have more than its share of good jobs in technology fields, but it’s underrepresented in the number of independent technology companies. That must mean tech workers don’t think a technology startup is a good bet and instead apply at a big company like UnitedHealth Group.
Pearson stepped aside as co-CEO of Jamf a couple of years ago, but he has no plans to chip away at the problem by starting another enterprise software company himself. The job he envisions doing in the next chapter of his career might best be described as a combination of promoter, connector and mentor.
He made a point of saying he speaks only for himself, but he’s formed his own goal of helping the Twin Cities technology sector grow over the next 10 years to at least four times the size it is now.
The first thing that has to happen to achieve his goal is simply more companies. Then there has to be a way to improve the odds of success and increase the speed at which they develop.
He is still working out the details of how he intends to help, but he knows what elements he needs to work on. First, he needs to collect as many founders of successful ventures as he can reach and enlist them as advisers and mentors to younger entrepreneurs.
Pearson said he remains grateful for the coaching and support Jamf board Chairman Jim Hansen gave him and his partner, Zach Halmstad.
“There is no way I could repay him for what he did for me, other than to go do it for some other people,” he said.
Pearson also envisions creating some kind of accelerator program, although it might not be exactly the kind of company in residence model popularized by Silicon Valley institutions like Y Combinator. He just knows there needs to be more hands helping the most promising companies get two years’ worth of development work done in six months.
His last priority is helping to deepen the talent pool, including currently hard-to-find employees for roles like sales representative, digital marketing managers and problem solvers for customers.
If Pearson’s dream is realized, in 10 years Sellner and Wallace will be totaling up the value of the companies acquired and get to more than $28 billion.
If that much wealth does get created in the region from successful exits of technology firms, it doesn’t seem likely that anyone will be asking about what kind of beer those founders all preferred.