Indianapolis: The Midwest's Silicon Valley

Indianapolis

It's a bit ironic that before founding a successful firm in an industry that prides itself on delivering precisely targeted marketing messages, Neil Berman was in the waste services business. Nevertheless, trash can lead to treasure.

After leaving, Berman took a circuitous route into email marketing, launching a firm 12 years ago that's now part of a thriving sector in the Indianapolis business community. Madison Avenue can produce Super Bowl commercials; Indianapolis is content to operate in below-the-line "measured marketing" with an roi-driven ethic. The greater metropolitan area is home to 70 or so businesses that provide email services, publish blogs, optimize search engines or try to crack the social media space.

A trio of circumstances in the late '90s prompted Berman to launch Delivra, an email services provider (esp). He was tired of being an accountant; his wife worked for the Postal Service; he wanted in on the dot-com boom. As with many bootstrap entrepreneurs, lack of knowledge be darned.

"I didn't know anything about technology or about the Internet," he says.

His wife's work seems to have played a critical role. Berman wondered why marketers were spending so much money to mail material when a more cost-effective and cheaper route beckoned in the form of email.

"At the time [that] was visionary," he says. "People didn't have email addresses on their business cards - if you can imagine that." Further, even marketers interested in email technology weren't exactly keen to pay for it, since it seemed easy enough to blast out a bunch of messages for free. Berman soldiered on, and Delivra now has 29 employees and five million dollars in annual revenue.

Berman has no aspirations to go public, which he feels would complicate his operations. At some larger companies in the market, however, it's a different story - notably at the booming ExactTarget, which has roots in email but now bills itself more broadly as an interactive marketing provider, and Angie's List, which collects consumer reviews of service companies.

Both continue to raise loads of money from leading venture-capital firms. ExactTarget, which pulled back on an ipo in 2009, has raised more than $140 million since then. And Angie's List chief executive officer Bill Oesterle told Bloomberg that an ipo is possible this year, as the company secured a $54 million investment several months ago.

Cloud-based integrated marketing software provider Aprimo - another candidate to go public - was bought by Teradata for about $525 million late last year but will remain in Indy. The Indy marketing community works with some of the most successful companies in the country, from Toyota to Intel to Bank of America to Groupon.

Many people may think of Indianapolis as flyover country or a cultural backwater. But it is the country's 27th-largest market per Nielsen, with about 1.1 million homes. While it may be best known for the Indy 500 and, more recently, Peyton Manning's majesty in leading the nfl's Colts, it is also a large state capital housing pharmaceutical firm Eli Lilly, Brightpoint in the wireless industry, mall operator Simon Property Group and the NCAA's operations.

What drives its growth as a marketing services hub? Most boil it down to three factors: a strong talent pool, both homegrown and imported; a relentless focus on customer service, maybe driven by Midwestern values; and a tech community looking to seed growth and build an ecosystem.

Nearby universities such as Ball State, Butler, DePauw, Purdue, Indiana University and IUPUI in downtown Indy (with 30,000 students) offer programs that prepare students for technology and business careers.

"I think that's a critical differentiator between Indy and other metropolitan areas," Delivra's Berman says.

Mike Bloxham, who recently left his post as director of insight and research at Ball State's Center for Media Design and who now works at Trendline Interactive, states: "As the sector has grown, so has the commitment of the universities in the area to emerging media in all its forms."

ExactTarget has about 1,000 employees globally and 600 in Indy. A hiring binge continued even during the depths of the recession. Chief marketing officer Tim Kopp says government officials helped in that area and with overall growth: "Through economic development credits and grants, local and state governments have helped to fuel our growth and allowed us to more aggressively invest in innovation and growing our team at a record-setting pace."

Hoosiers, as Indiana residents are called, like it at home. The majority of Berman's staff at Delivra are born and bred in the state. Many graduates of local universities want to stay as long as they have a good job.

Others head to Chicago, Silicon Valley or Seattle, but then look "for an opportunity to come back...to be near family," says Jim Jay, who heads TechPoint, an organization designed to facilitate growth in Indiana's tech sector.

That brings new perspectives and insights that can fuel business in Indy and feed into community passion.

Beyond hiring natives, Indy is also finding success in attracting experienced executives from Silicon Valley and New York, many of whom had never envisioned themselves living among cornfields and endless farmland.

But in central Indiana, traffic can be less of a problem and commuting a breeze, while the cost of living is a major enticement. "It's a tremendous quality of life," says Chris Baggott, who co-founded ExactTarget but left in 2006 to found Compendium, which helps businesses publish on blogs, Facebook, Twitter and more. He says ExactTarget's best recruiting tool was "people who are sick of living in the Valley and sick of not seeing their kids' baseball games."

Though not a native Hoosier, Baggott is an active booster of the Indy marketing scene. After more than a decade working for R.R. Donnelly in database marketing in Chicago and New York, he came to Indy, partly because his wife was from the state. But he was also tired of commuting back and forth to the Big Apple from his Connecticut home. "I just didn't want to be 50 still riding that train," he says.

Housing, another perk of living in Indy, can cost a fraction of what it does in the Valley or other flashier communities. "Everyone wants the California climate, not everyone wants the California prices," says Lisa Arthur, chief marketing officer at Aprimo, who came to Indy two years ago from Northern California.

In business operations, executives say Indianapolis has a more customer-focused approach than what is found elsewhere, which can be a differentiation point - as long as the technology is on par. "Technology is a ticket to play, you've got to have that," says Delivra's Berman. "But without the personal component, you're not going to be successful long-term."

At TechPoint, Jay speaks about the increased focus on ROI with a "measured marketing" approach - and ROI gets more prominent as marketing budgets get tighter.

"As you think about the Midwest being a little more conservative, people are very interested in knowing a dollar gets me what," Jay says.

Indy is trying to create a culture of start-ups, where people at larger companies are willing to jump in and start their own ventures. At TechPoint, Jay's Halo Capital Group has invested more than $17 million in seed money in the last three years. He says that ExactTarget and Aprimo have also spawned start-ups. Baggott says there is an effort afoot to turn an old warehouse in Indy into a start-up incubator similar to one in San Francisco, perhaps as soon as this summer.

If Indy's "measured marketing" community is flying under the radar, executives and boosters want to increase its visibility. A TechPoint initiative has used PR firms to publicize the market's opportunities and benefits.

Aprimo's Arthur says: "I'm not sure we in Indy have been telling the story broadly or frequently enough to help people understand that business isn't just done on the coasts."

Tags: email, marketing, vc
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