New Ideas, New Markets, New Insights
All around the country, Americans are dreaming big. Their boldest ideas are changing their communities--and having a ripple effect throughout the world.
Across the United States, Americans are dreaming big. Their boldest ideas are changing their communities--and rippling out into the world at large. In this series, United States of Innovation, we showcase some of the country's best stories of innovation.
Cigarettes and technology startups have at least one thing in common: Durham, North Carolina. One hundred fifty years ago, Durham-based entrepreneurs Washington Duke and W.T. Blackwell battled for tobacco sovereignty in a 19th century-style version of Microsoft v. Apple. American Tobacco Company, makers of Lucky Strike, emerged and formed the backbone of North Carolina’s economy for the next century.
Today, Durham’s innovation scene is kindled by tech giants like IBM, Lenovo, and about 140 other companies with stakes in the ground at the 7,000-acre Research Triangle Park. It’s an unincorporated area, a swath of land belonging to no municipality, dedicated to R&D. Its secret sauce is a steady stream of computer science graduates from nearby Duke University, NCSU, and UNC-Chapel Hill, making the area a tech recruiting oasis, an electromagnet for technology companies in the American South, and a place prominent U.S. startups like Airbnb  choose to outsource their design and development.
“In today's competitive atmosphere, sourcing, recruiting, and hiring a capable Android team could've easily taken upwards of six months,” says Andrew Vilcsak, mobile platform lead at Silicon Valley-based Airbnb , recently valued at $1.3 billion. Instead of outsourcing work for its much-needed Android application overseas, Airbnb sought out Two Toasters , a 14-person mobile product shop in Durham with a reputation for execution. “We really viewed Two Toasters as a temporary extension of our internal team, rather than simply a distinct group of contractors,” Vilcsak says.
Makers of mobile apps for Yipit, Lexus, Acura, GateGuru, Go Try It On, and others, Two Toasters chose Durham because of its concentration of mobile programming talent.
“People need mobile, and most recognize they need it fast,” says Simon Kirk of Great Circle Management Company, who consults for Two Toasters. “The combination of speed and the ability to deliver technically complex products are reasons to use external resources.”
Unlike crowded NYC or San Francisco, computer science talent in midsize cities like Durham can be less of a chore to recruit . And less expensive.
“I don’t think we’d be able to cultivate a team of 10 plus mobile developers as easily in NYC or the Valley, because you’re constantly coming up against Foursquare and these other startups that are very mobile specific,” says Two Toasters cofounder Rachit Shukla. “We’re able to do that in Durham particularly because of really great universities and other Fortune 500 companies here that have really strong talent. Combined with the fact that Durham is an area that is constantly at the top of the quality of life lists ... it’s become a very powerful aspect of our business.”
Two factors play into the surge of tech startups launching in Durham in the last two years, Shukla says. First is the launch of American Underground , a 26,000-square-foot shared office hub for startups, with the tagline: Innovation Revolution. Second is the Y-Combinator-style accelerator, Triangle StartUp Factory , which inaugurated a class of five startups (including one from Chicago) this month, and handed each company $50,000.
Also this month, nearby email marketing startup iContact  was acquired for $179 million by Vocus. Other startups in the local scene include Shoeboxed , an app that lets users digitize business receipts; and Appia , which claims to be the largest open app marketplace in the world. “I think they’re a hot company to watch in the area,” Shukla says. “They’re powering a lot of mobile app stores around the world and have created really interesting monetization around it. Almost like Google Adsense for mobile, for downloads.”
Though Big Tobacco’s heyday has come and gone, Durham, you could say, is still smoking.