Silicon Prairie

When it comes to developing a high-tech hub, every location dreams of emulating the unparalleled success of the most-famous U.S. tech cluster, California’s Silicon Valley. And it seems like a lot of places have come to the conclusion that the best way to get the word out about their emerging tech clusters is to put the word silicon in front of a word describing the local geological topography.

high-tech hubDuring the dot-com boom in the 1990s, a neighborhood in Lower Manhattan branded itself as Silicon Alley. More recently, our friend Gov. Gary Herbert of Utah has taken to calling the Beehive State’s burgeoning information technology, digital media and software development cluster The Silicon Slopes, a clever way to leverage the rep of Utah’s world-class ski resorts.

[Don’t tell Gov. Herbert we mentioned this, but during our last interview with him we asked if Utah has any contingency plans to deal with a receding snowcap due to climate change. He told BF the state is aggressively expanding the availability of snowmaking equipment at mountain resorts. In future decades, perhaps, the term Silicon Slopes may no longer be a double entendre in UT].

So, is everybody ready for the Silicon Prairie?

That’s right. The states in the middle of the U.S., sometimes derisively referred to by coastal elites as “flyover country,” have become a prime destination for entrepreneurs who are putting down roots for new tech startups. The tech-startup activity is so brisk in Nebraska, Iowa, Kansas and Missouri that there’s an online newsletter devoted to covering the new startups in the region. The primary focus of is the Omaha-Kansas City-Des Moines triangle.

A recent report from CBS News on the entrepreneurial activity in Lincoln, NE called tech startups “the biggest new cash crop” in America’s breadbasket. It’s not a stretch to say that Lincoln, now home to more than 100 software startups, is becoming a “mini Palo Alto.” Once-abandoned buildings now house co-working spaces and incubators.

The CBS report highlighted the decision by the founders of Bulu Box, an online service that provides monthly samplers of premium health products, to plant their flag in Lincoln. Here’s the kicker: the entrepreneurs who started the service, Stephanie and Paul Jarrett, lived in San Francisco.

“We could [have been] another startup on the West Coast, another startup in the Valley, or we could be part of this movement,” Paul told CBS. “It felt like people in Nebraska—investors, other connections—would bend over backwards to help you,” Stephanie added. Since its 2012 launch in Lincoln, Bulu Box has signed up 100,000 subscribers and last year generated $5 million in sales.

The Jarrett’s cost of living improved dramatically when they moved from San Francisco to Lincoln: the median price for a home in San Francisco is about $1.1 million; in Lincoln, it’s about $158,000. The Jarretts also said they were able to grow their team (and office space) in Lincoln a lot faster and with a lot less capital than it would have taken in Northern California.

Another tech player based in Lincoln is Hudl, which developed software that can instantly analyze game film sent to its site by professional and amateur sports teams. Hudl co-founder David Graff credited the support he received from Nebraska’s university system as a key to his company’s success. He started with three employees and now has 400, including workers in 14 countries. Graff is planning to build a new global HQ in Lincoln.

In 2015, almost three-quarters of high-tech investment dollars still went to the nation’s traditional tech heavyweights: California, New York and Massachusetts. But Steve Case, a co-founder of AOL, is placing a big bet that this trend is about to change. Case has launched Revolution, a venture-capital firm that plans to invest about $1 billion in tech startups in the middle of the U.S.

Memo to VC moneymen: if you’ve booked a non-stop flight from New York to L.A., you might want to switch to a route that connects in Des Moines or Omaha. Otherwise, you won’t get a piece of the hot-and-heavy action in “flyover country.”