Wednesday, September 7, 2011
Pittsburgh powered by high-technology success stories
Unrelenting desire for the latest video game helped spark the entrepreneurial spirit in Andrew Mason.
Now, as the 30-year-old creator and CEO of Groupon.com prepares his company to go public, he could become yet another Pittsburgh native to hit payday on the Internet. Groupon seeks at least $750 million through its pending IPO and could be valued at about $30 billion, analysts predict.
Not bad for a guy who used to hawk candy at school and deliver bagels to make a buck.
"He always wanted to have the most current electronic device," Bridgit Wolf, 58, of Mt. Lebanon said about her son, Mason, who started the popular daily-deal website nearly three years ago in Chicago. "Every time a new Nintendo came out, he wanted it."
Mason, who declined to be interviewed, is among a growing number of Pittsburghers whose technology successes could make them new-age industrialists of sorts, following in the footsteps of giants Andrew Carnegie and George Westinghouse.
The question of "Why Pittsburgh?" draws a multifaceted answer.
Some attribute it to the population's work ethic and the research and development prowess of Carnegie Mellon University and the University of Pittsburgh, with its Institute for Entrepreneurial Excellence. Others note that the demise of the steel industry and other manufacturers forced growth in sectors such as high-tech and health care fields.
"The best thing you can have are success stories," said Mark Heesen, president of the National Venture Capital Association in Washington. "Entrepreneurs are going to look and say, 'If they can do it, so can I.' "
Other technology successes tied to Western Pennsylvania include:
• Mark Cuban, 52, who grew up in Mt. Lebanon, owns the Dallas Mavericks and sold an Internet radio company to Yahoo! in 1999 for $5.7 billion.
• Chad Hurley, 34, an Indiana University of Pennsylvania graduate, co-founded YouTube in 2005 and sold it to Google a year later for $1.65 billion.
• Charles Geschke, 71, a Carnegie Mellon graduate, in 1982 co-founded Adobe Systems Inc., the world's largest maker of graphics and publishing software that recorded $3.8 billion in 2010 revenue.
• Andy Bechtolsheim, 55, and Vinod Khosla, 56, Carnegie Mellon graduates, in 1982 co-founded Sun Microsystems, a computer and information technology company, which Oracle Corp. bought last year for $7.4 billion.
• Francois Bitz, Onat Menzilcioglu, Robert Sansom and Eric Cooper, Carnegie Mellon professors, in 1994 founded Warrendale-based telecommunications company FORE Systems and sold it to a British company in 1999 for $4.5 billion.
"There's definitely something special going on here," said Audrey Russo, president and CEO of the Pittsburgh Technology Council. "Entrepreneurial success is happening everywhere. Success is happening in Detroit. Good things are happening in Topeka, Kansas. But there is no way it's happening like it is here."
Russo counts Cuban, Homestead native and Intuit Inc. board Chairman Bill Campbell and Regis McKenna, a Pittsburgh native and Silicon Valley investor, as people with significant business success who have "strong roots that happened here."
"This is a great place where it is in the DNA of people that you have to make things," Russo said.
That long has been the case, said Terri Glueck, spokeswoman for Innovation Works, the region's single-largest investor of technology startups.
"This is still a very engineering-driven community, and that dates back to the days of Westinghouse," Glueck said. "What we create is technology, and it always has been."
The attraction of Carnegie Mellon drew Michael "Fuzzy" Mauldin from Texas to Pittsburgh in the early 1980s to study.
"I had the opportunity to work with the best people in the world at what they do," said Mauldin, 52, of Austin, who in 1994 developed the Internet search code that became Lycos while teaching at the Oakland university.
He and the university sold majority interest in the web portal and search engine company in 1995 to a Boston investor for $2 million. A Spanish company in 2000 bought Lycos for $12.5 billion in stock. It sold again last year for $36 million.
Mauldin thinks his success helped change people's perception of technology entrepreneurship in Pittsburgh.
"There's now the expectation of, 'Fuzzy got rich doing this stuff; maybe I can get rich, too,' " he said.
The Lycos success occurred after Carnegie Mellon in 1993 opened its Center for Technology Transfer and Enterprise Creation. Its instant hit gave the university impetus to continue supporting spin-off companies, said Tara Branstad, the center's associate director.
"I don't think it hurts in any environment to see one of your colleagues get rich," Branstad said.
The school helps start projects in varying technology fields, Branstad said, because no one can predict where the next "big hit" might happen.
Since 2000, Carnegie Mellon has spawned 77 technology startups. That doesn't include companies that former students and professors started, which Branstad estimates are twice as many as those directly linked to the university.
"Pittsburgh is doing a lot better in startups, but I don't know if we have critical mass yet. We're getting close," Branstad said.
Mauldin said he wishes Lycos hadn't moved its headquarters to Boston from Pittsburgh.
"There is nothing wrong with Pittsburgh," he said. "There's no reason you can't have a successful business there. I did."
McCandless-based Dynamics Inc. is another promising company that could be destined for tech success with its virtually fraud-proof credit and debit cards. The company secured $35 million last month from a Boston venture capital group, and founder Jeffrey Mullen turned down more money in order to stay here instead of moving to Silicon Valley.
"We're trying to bring Pittsburgh back to what it once was, which was the entrepreneurial haven in the United States," Mullen said. "Pittsburgh, it could be said, was the birthplace of entrepreneurship in the United States."
Wolf can't gauge whether her son's company could have become the fastest-growing business in Internet history if it had been based in Pittsburgh. Groupon is in Chicago largely because Mason attended college there and met a financial backer there, he has said in other interviews.
But Wolf recognizes that Mason's business background started while he lived in Western Pennsylvania. His roots include an engineer grandfather and parents who each started businesses, Wolf said. She owned a photography studio. His father, Bob Mason of Upper St. Clair, imports diamonds.
In school, Mason hawked candy to kids in the lunchroom, his mother said, and later started a weekend bagel delivery service and a computer-repair business. He delivered the defunct Pittsburgh Press, though not for long because it didn't pay enough, she said. Mason's LinkedIn profile lists time spent as a server at Chi Chi's Mexican Restaurant.
"There is not as much opportunity to lie around in the sun here, so you have to go out and do something," Wolf said. "Now it looks like he has a big company."
She finds her son's success difficult to grasp, but understands that people are pulling for him as they have for other local successes. The mother of one of Mason's high school classmates recently reminded Wolf that her son always had good ideas.
"(Pittsburgh) has a small-town feel," Wolf said. "We're very much aware and proud of being close to people who succeed."
Article courtesy of Pittsburgh Tribune Review