Four Trends Impacting Montana Tech Businesses in 2019

Morgan Hausauer, Perficient Managing Director – Technical Delivery, discusses her company’s 2018 acquisition as part of a conversation about how Montana can keep momentum and address future needs in 2019. Other featured speakers (left to right) included Andrew Field, CEO of PFL, and Chris Hamilton, onX VP of Product Management. Photos by Photos by Mallory, 40 Watt Photo.

By Noah Hill

As the Montana high tech economy continues to grow, high tech businesses have become an increasingly integral component of life in the Big Sky State. According to a survey released by the Bureau of Business and Economic Research at the University of Montana, the high tech industry now employs more than 7,500 workers in jobs that pay double the state’s median wage. Moreover, the industry as a whole is growing at nine times the statewide economy.

Growth in the business sector, however, also can present new challenges for companies who must adapt in a rapidly changing ecosystem. In late February, Montana tech executives braved the cold winter weather to discuss some of the challenges they anticipate facing in 2019 at a Montana High Tech Business Alliance CEO Roundtable hosted by Foundant Technologies in Bozeman.

 

1. Increasing Access to Capital Investment

Andrew Field, CEO of PFL, opened up about his company’s journey to procure investment.

The ability of Montana companies to attract capital has been rapidly improving over the last few years. In 2018, Andrew Field, CEO of PFL, inked a deal with Goldman Sachs for an investment of $25 million, one of the largest ventures ever made within the state.

According to Field, until recently one of the primary barriers to finding investors was the location.

“Over the years, we have had a number of venture capitalists say ‘Look, sooner or later every company gets in trouble. When that happens, I have to spend more time with them, and I am not getting on a plane from San Francisco to Montana,’” Field said.

Ten years ago, attracting investors in tech businesses based in Montana was a difficult endeavor for a variety of reasons, including distance from major tech hubs (compounded by lack of airport infrastructure) and a relatively small community of entrepreneurs and businesses in the tech sector. However in 2015, Will Price, a former CEO of a tech company eventually bought by Snap, moved to Bozeman. There, he established Next Frontier Capital with the specific mission of supporting technology companies in Montana.

Fast-forward three years, and Next Frontier Capital is at the nexus of tech investments in Montana, not only making individual transactions as a firm, but also partnering with larger out-of-state firms with significantly more resources to grow Montana tech businesses.

onX is the recipient of a $20.3 million investment from one such partnership involving Next Frontier. Led by Summit partners in Boston, the funding has helped the company expand in both Missoula and Bozeman.

Chris Hamilton, the VP of product at onX, explained that having seasoned business acumen was a very welcome addition to a relatively young company.

“Our investors have a passion for the business,” Hamilton said. “We’ve found them to be really helpful in our board meetings and helping us evaluate the decisions in front of us — they’ve been great partners so far.”

 

2. Increasing Demand for Montana Tech Workforce

High-paying positions are being posted in MHTBA’s jobs portal, but during Q1 2019, there weren’t enough applicants for the current needs. Read more.

Rapid growth of a company usually implies that the business needs to hire more personnel, but Montana’s hiring needs have actually outpaced the size of the tech workforce. Recent analysis of the open and filled positions in the Montana High Tech Business Alliance jobs portal has revealed that in Q1 of 2019, less than half of all open tech jobs on the jobs board have been filled.

In particular, recruiting senior-level individuals has posed a unique challenge to Montana businesses, particularly when individuals are likely taking a pay cut.

“It’s psychologically difficult to go backwards,” Field said. “A developer in Denver may make $170,000 but we can’t offer that here in Montana.”

Montana employers have found alternative ways to market their jobs to potential employees living out of state, namely by advertising the unique Montana lifestyle, often to individuals who have had prior experience in the state. Jenn Ewan, a partner at Missoula law firm Sova, said she had particular success recruiting people with Montana connections, often working in conjunction with university professors who keep in touch with students who have since left the state.

Christina Henderson, executive director of the Montana High Tech Business Alliance, agreed that recruiting out-of-state workers can be an effective tool.

“There is a slow burning timeline of people who want to be in Montana or come back to Montana,” Henderson said. “They are usually just waiting for the right opportunity.”

 

3. Education Initiatives Needed for Long-Term Workforce Growth

Natalia Kolnik, director of education at the Montana Science Center in Bozeman, believes Montana companies can help foster an early interest in STEM fields in school-age children.

As companies look for long-term solutions to increase the size of the tech workforce in Montana, many companies want to improve the accessibility of tech education in public schools, two- and four-year institutions. Additionally, many companies are looking to alternative education programs like apprenticeships and code schools to expand the tech workforce to non-traditional students.

Natalia Kolnik, director of education at the Montana Science Center in Bozeman, believes that fostering an early interest in STEM (Science, Technology, Engineering, and Mathematics) will encourage students to eventually pursue careers in related fields.

“[Industry] volunteers come in to schools and speak in a really deep way that encourages kids to pursue careers,” Kolnik said. “They help fourth-graders and middle schoolers and high schoolers understand how many different ways they can go into that industry.”

Ewan has identified another demographic in need of tech education: lawyers.

“There are very few attorneys in the [tech] space in Montana,” Ewan said. “With all of the tech growth happening here, we need to get up to speed.”

Specifically, Ewan has proposed a clinic for third-year law students at the University of Montana’s Alexander Blewett, III School of Law. The objective of the clinic would be to produce specialized “needle talent,” specifically geared towards helping Montana tech businesses with legal issues ranging from mergers and acquisitions to intellectual property by placing law students in tech businesses under the supervision of practicing attorneys.

“Attorneys need to be trained differently,” Ewan said. “But they need to spend some time with companies to understand that.”

 

4. Networking and Mentorship Help Leaders and Employees Grow

Luke Mauritsen, founder and CEO of Montana Instruments, said high-growth companies like his could benefit from more mentorship opportunities.

Education and continued training is not only important for individuals who may wish to enter the tech industry, but also for those who already work within the sector.

One way to facilitate continuing education in Montana is to host events where employees from a variety of companies can discuss best practices about specialized topics, like software development or engineering.

“Organizing these networking events, not for CEOs, but for higher level management, have had huge turnout,” said Margit Baake, former Development Director for the Montana Chamber of Commerce, referencing efforts made by other tech alliances in the U.S.

Field said local meetups in Seattle and the Bay Area allow developers to learn from each other and could be a model for Montana as the tech community reaches a critical mass.

“I walked into a room with a bunch of developers debating the benefits of Python and Ruby, and it was all over my head,” Field said. “It’s an enormous benefit [to have these kinds of discussions].”

Montana tech leaders also acknowledged how mentorship by more experienced executives can help high-growth companies to scale and bring needed expertise into the ecosystem.

Luke Mauritsen, CEO and founder of Montana Instruments, met a former VP of a public photonics company through Montana contacts. Mauritsen said that the VP’s experience and mentorship has provided key insights for the growing company.

“[He is] showing us things that we’re blind to and showing us a bigger picture, helping me understand how we’re going to establish a beachhead in a market where there’s companies much bigger than us,” Mauritsen said. “From an operations perspective, it’s just transforming our business. So I would love to see more of that.”

Kregg Aytes, Professor at Montana State University Jake Jabs College of Business & Entrepreneurship, said nationally recognized business leaders with connections in Montana often reach out to local universities looking to mentor students. He suggested there’s potential to also connect those experienced leaders with high-growth businesses looking for mentorship.

“There are untapped resources, here in Bozeman, and around the state,” Aytes said. “The appetite for [mentorship] at the top of the pyramid is exceptionally high.”


About the Author: Originally from Kalispell, Noah Hill will graduate from the University of Montana in May with a degree in microbiology and will be attending law school in the fall. In his free time, Noah enjoys rafting, fishing, hiking, and reading a good book.

About the Publisher: Launched in 2014, the Montana High Tech Business Alliance is a nonpartisan nonprofit association of more than 370 high tech and manufacturing companies and affiliates creating high-paying jobs in Montana. For more information, visit MTHighTech.org or subscribe to our biweekly newsletter.

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